With this kind of title, I bet you were thinking, “Hey, there is going to be a trick!” Well, there’s not a really a trick. But, we do have a tip: Use market data to establish physician payment rates.
There it is. The straight story from someone who is not in the business of producing, assimilating, repackaging, benchmarking or from one who gains by suggesting this be part of your strategy. And, here’s another tip: Use market data consistently and often. Take a page out of Nike’s book — Just Do It!
Have you ever flown Southwest Airlines? Sometimes the flight attendants, jazz up the safety speech with a quote, “If you haven’t ridden in car since 1972, this is a seatbelt.“ Well, if you haven’t been in hospital management since 1990, it is illegal to pay physicians more than fair market value (FMV) rates. The reasons are obvious to all who work in legal, compliance, and those awake in hospital leadership.
Now, for even more tips:
- Select a source for market data. There is a plethora of market data available from reputable sources. Here are a few examples: MD Ranger maintains a database of payment rates for administrative time for hospitals to use as an example. This database is great because it isn’t based on survey data, it is straight out of the contract. You must share your data in order to get the data. MGMA puts out percentiles for each region of the country and for each specialty. The data is easily accessible and reasonably priced. Another great source is a valuation company. Value Management Group (VMG) offers a calculator approach and individualized studies.
- Select an approach. Said another way, establish a corporate approach that in all cases, medical directorship pay rates by specialty will be within the 75th percentile or never will go above the 90th. Whatever your approach is, stick with it. If your process is consistent, it will make it much easier to defend, if that’s ever needed. Additionally, pick a time period for reviewing every FMV rate. One year, two years, three years – opinions vary – but the point is, review it. Fair Market Value moves with the market, so it should be reviewed regularly.
- Follow your contracts. This one sounds so basic, but it is important to have finance and compliance audit these payments on a regular schedule to confirm they are updated.
Paying physicians is complex and highly regulated. Make sure to follow these tips to keep your rates within market data rates. No trick, they will keep you out of hot water!