In today’s healthcare landscape, managing provider compensation is more than just setting pay rates; it’s about aligning financial strategies with regulatory compliance and operational efficiency. In a recent HFMA webinar I hosted with our clients Scott Steiner (CEO) and Jonathan McGuire (Chief Compliance Officer) of Phoebe Putney Health System, we discussed trends and strategies for optimizing provider compensation to ensure both financial health and compliance.
Key Challenges in Provider Compensation
With the healthcare industry facing ongoing provider shortages, increasing costs, and regulatory scrutiny, compensation has become a focal point for healthcare organizations aiming for sustainability and growth.
According to Scott, one significant issue Phoebe faces is the ongoing demand to recruit and retain talent while managing a $1 billion operation in a largely rural setting. These pressures are compounded by complex compensation models that often blend base salary, production incentives, and value-based pay elements, all of which require meticulous oversight to stay compliant.
Jonathan highlighted the risks associated with temporary staff and non-standard work schedules, both of which bring unique compliance challenges. Ensuring these providers meet compliance standards and align with organizational goals can be daunting, particularly when traditional models fail to accommodate emerging provider expectations around work-life balance and alternative schedules.
Linking Compliance and Financial Health
During the conversation, our panel underscored the importance of aligning compliance with financial health, focusing on the complexities of fraud and abuse regulations, such as the Stark Law and Anti-Kickback Statute. Ensuring provider compensation adheres to fair market value and does not incentivize referral volumes is critical. Scott shared how Phoebe, using tools like Ludi’s DocTime®, has minimized risk through standardized processes that simplify the tracking and documentation of compensation agreements.
A critical takeaway was the emphasis on developing diverse compensation committees that bring together HR, finance, compliance, and legal teams to review compensation frameworks from multiple perspectives. As Jonathan noted, creating an environment where compliance is a priority across all leadership levels is essential for sustainable success.
Overcoming Operational and Data Challenges
Provider compensation management is labor-intensive, particularly when dealing with multiple pay models. Tracking physician work RVUs, which are tied to clinical productivity, requires accuracy at each step, from data entry to final payment. Mistakes, even minor ones, can erode trust between providers and administrators, making it essential to invest in data integrity and automation.
At Phoebe, Scott and Jonathan emphasized the need for a standardized process to track overall provider spend. Centralized data systems and automated tools help streamline tracking and improve transparency. Starting with manageable projects, like the digitization of medical directorship agreements, has allowed Phoebe to make incremental improvements that can scale over time.
Pathways to Financial and Compliance Success
For organizations looking to optimize provider compensation, the speakers outlined a maturity model that moves from basic contract management to advanced performance monitoring and strategic alignment with organizational goals. Each phase requires clear policies, streamlined processes, and regular data audits to ensure compliance and cost efficiency. By standardizing agreements and consolidating compensation data, healthcare systems can better forecast provider costs and make data-driven adjustments to improve both financial outcomes and provider satisfaction.
Takeaways for the Future
The pathway to mastering provider compensation requires more than compliance; it demands cultural alignment across the organization.
Creating a shared responsibility for compliance among executives, compliance officers, and operational leaders can transform compensation from a cost center to a strategic asset. As Scott emphasized, “It’s about rowing in the same direction to serve our communities compliantly and effectively.”
Provider compensation is a challenging area that intersects financial, operational, and regulatory domains. By fostering transparency, standardizing processes, and leveraging technology, healthcare systems can better manage these complexities and build financially resilient, compliant organizations.
