4 Ways to Optimize Your Strategy Around Physician On-Call Contracts

Nearly all hospitals have to manage on-call contracts. Whether you run a large hospital, trauma center or a small private hospital, chances are you have on-call physicians. There are several factors that make compensating on-call physicians tricky though. From rate differentiation and adhering to fair market value (FMV), to contract type, we’ll explore a few ways your organization can simplify the management process of these physician contracts.

What It Means to be On-Call Today
In the past, physicians were willing to take on-call as a means to grow their individual practices. For example, a doctor might meet a patient who needed a bone set in the emergency department, then they would have the patient come to their office for follow-up care. On the primary care side, a similar scenario might occur, where physicians would take on-call to get new patients. Today, hospitalists primarily cover all inpatient visits on the medical side.

It is fair for on-call physicians – who are held to high levels of productivity and increasing costs of their own practice – to want to be paid for their time. Consider what it means to be on-call these days. You have to physically remain within a certain number of minutes to the hospital in case you are needed, so your time is often not your own. Put another way: You cannot have friends over if you might be called into work. But the complexities of on-call arrangements don’t stop there. 

The Basics of On-Call Contracts and Payments
With on-call contracts, hospitals determine different rates depending on specialty, location and market considerations. For instance, an on-call dermatologist will likely make a lower rate than an on-call general surgeon. This is in part due to the frequency of actual call-ins as well as variable pay rates by specialty. 

As for the payment terms, on-call physicians may be paid an hourly rate, daily unit payment, weekly unit payment, monthly unit, annual stipend, per call or per hour of call. Daily units of service are the most common. There is also a new complexity with so many physicians employed by hospitals. Most employed specialists have some component of on-call required in their contract. For example, a physician may cover two 24-hour shifts of on-call in the emergency room as part of a contract, where shifts 3-7 will be paid at x dollars for a weekday, y for a weekend and z for a holiday. In other words, it can get complicated and fast!

Simplifying Your Approach to On-Call
Many hospitals still rely on paper time logs and call calendars to process on-call payments that are then manually entered into payroll for employed physicians or accounts payable for independent physicians. This leaves room to all types of errors. For instance, it is common for a hospital to either pay the wrong unit for the on-call shift, or inadvertently pay two physicians of the same specialty to cover the same shift when time is entered by physicians and processed at different times. These errors may be small in a clerical sense, but they cost hospitals thousands of dollars each year. It can be hundreds of thousands at major trauma centers. 

Requiring physicians to track on-call by paper can also contribute to burnout amongst medical staff. According to our recent survey of physicians nationwide, 68 percent of doctors said burnout is still an issue. At the same time, 55% reported spending 1 to 3 hours per day on admin work unrelated to patient care or EHRs, including filling out paperwork for payments. This is not where you want physicians spending much of their time.

So, here are four tips to enhance your strategy around on-call contracts and payments.

  1. Make sure you need that specialty. Paying for on-call is a slippery slope. Once you begin paying for orthopedic calls, there will be a long line of other specialties in your office. Explore all possible options before paying for on-call. Start by asking yourselves: Can we pay the physician to come in when needed? 

  2. Keep up with FMV. Hire a third-party agency to provide an FMV opinion for each specialty. Considerations include location, physician experience and potential shortages in the specialty. Because things are constantly changing, the time and trouble it takes to determine FMV is well worth it, considering it can keep you in compliance and at market rates.

  3. Consider all options for call including telemedicine. COVID-19 has changed so much of our world, but especially in healthcare. Telemedicine is more prevalent than ever, so lean on these advances to fulfill on-call coverage where needed. Take a look at your contracts and determine if these services are something that can be provided from afar.

    Another solution may be to share on-call physicians with another hospital. Systems in particular can leverage areas of specialty across other facilities. COVID-19 has made telemedicine more prevalent and more accepted, so you may want to consider leveraging it in a way that allows you to cover tough specialties (i.e., neurosurgery) as needed.  

  4. Automate. Physicians should be paid off the call calendar without any required action on their part. This will improve the physician experience, while also helping your organization avoid errors that could cost you money and jeopardize your compliance down the road. A typical trauma center might be paying $25 million annually in on-call payments. If you’re managing that on paper, it’s really easy to have errors. You have to build a system that automatically checks payments against the on-call schedule. 

It’s 2022. If you aren’t leveraging technology to automate your on-call compensation, you’re likely losing money and (at worst) risking compliance issues. It’s time to change that and it all starts with automation.  

Want to learn more about this topic? Check out a webinar we conducted with health care valuation firm LBMC on enhancing on-call payment strategies.

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