Category Archives: Physician Compensation

8 Reasons Hospitals must Re-think their Future

Posted on by • Posted in 2024 Election Issues, Affordability, Health Insurance Industry, Health Policy, Health System, Hospital, Hospital Industry, Inflation, Market Consolidation, Market Power, Media Backlash, Medical Debt, Medicare Funding, Medicare Payment, Operating Expenses, Operating Income, Operating Margin, Operating Margin Drivers, Operating Metrics, Operating Performance, Operating Revenue, Physician Compensation, Physician Discontent, Physician Shortage, Physician Workforce, Strategic Change, Strategy, Strategy and Transformation, Surprise Bills, Survival Mode, Sustainable, Value-Based Healthcare • Leave a comment
8 Reasons Hospitals must Re-think their Future

Today is the federal income Tax Day. In 43 states, it’s in addition to their own income tax requirements. Last year, the federal government took in $4.6 trillion and spent $6.2 trillion including $1.9 trillion for its health programs. Overall, 2023 federal revenue decreased 15.5% and spending was down 8.4% from 2022 and the deficit increased to $33.2 trillion. Healthcare spending exceeded social security ($1.351 trillion) and defense spending ($828 billion) and is the federal economy’s biggest expense.

Along with the fragile geopolitical landscape involving relationships with China, Russia and Middle East, federal spending and the economy frame the context for U.S. domestic policies which include its health system. That’s the big picture.

Today also marks the second day of the American Hospital Association annual meeting in DC. The backdrop for this year’s meeting is unusually harsh for its members:

Increased government oversight:

Five committees of Congress and three federal agencies (FTC, DOJ, HHS) are investigating competition and business practices in hospitals, with special attention to the roles of private equity ownership, debt collection policies, price transparency compliance, tax exemptions, workforce diversity, consumer prices and more.

Medicare payment shortfall: 

CMS just issued (last week) its IPPS rate adjustment for 2025: a 2.6% bump that falls short of medical inflation and is certain to exacerbate wage pressures in the hospital workforce. Per a Bank of American analysis last week, “it appears healthcare payrolls remain below pre-pandemic trend” with hospitals and nursing homes lagging ambulatory sectors in recovering.”

Persistent negative media coverage:

The financial challenges for Mission (Asheville), Steward (Massachusetts) and others have been attributed to mismanagement and greed by their corporate owners and reports from independent watchdogs (Lown, West Health, Arnold Ventures, Patient Rights Advocate) about hospital tax exemptions, patient safety, community benefits, executive compensation and charity care have amplified unflattering media attention to hospitals.

Physicians discontent: 

59% of physicians in the U.S. are employed by hospitals; 18% by private equity-backed investors and the rest are “independent”. All are worried about their income. All think hospitals are wasteful and inefficient. Most think hospital employment is the lesser of evils threatening the future of their profession. And those in private equity-backed settings hope regulators leave them alone so they can survive. As America’s Physician Group CEO Susan Dentzer observed: “we knew we’re always going to need hospitals; but they don’t have to look or operate the way they do now. And they don’t have to be predicated on a revenue model based on people getting more elective surgeries than they actually need. We don’t have to run the system that way; we do run the healthcare system that way currently.”

The Value Agenda in limbo:

Since the Affordable Care Act (2010), the CMS Center for Innovation has sponsored and ultimately disabled all but 6 of its 54+ alternative payment programs. As it turns out, those that have performed best were driven by physician organizations sans hospital control. Last week’s release of “Creating a Sustainable Future for Value-Based Care: A Playbook of Voluntary Best Practices for VBC Payment Arrangements.” By the American Medical Association, the National Association of ACOs (NAACOs) and AHIP, the trade group representing America’s health insurance payers is illustrative. Noticeably not included: the American Hospital Association because value-pursuers think for hospitals it’s all talk.

National insurers hostility:  

Large, corporate insurers have intensified reimbursement pressure on hospitals while successfully strengthening their collective grip on the U.S. health insurance sector. 5 insurers control 50% of the U.S. health insurance market: 4 are investor owned. By contrast, the 5 largest hospital systems control 17% of the hospital market: 1 is investor-owned. And bumpy insurer earnings post-pandemic has prompted robust price increases: in 2022 (the last year for complete data and first year post pandemic), medical inflation was 4.0%, hospital prices went up 2.2% but insurer prices increased 5.9%.

Costly capital: 

The U.S. economy is in a tricky place: inflation is stuck above 3%, consumer prices are stable and employment is strong. Thus, the Fed is not likely to drop interest rates making hospital debt more costly for hospitals—especially problematic for public, safety net and rural hospitals. The hospital business is capital intense: it needs $$ for technologies, facilities and clinical innovations that treat medical demand. For those dependent on federal funding (i.e. Medicare), it’s unrealistic to think its funding from taxpayers will be adequate.  Ditto state and local governments. For those that are credit worthy, capital is accessible from private investors and lenders. For at least half, it’s problematic and for all it’s certain to be more expensive.

Campaign 2024 spotlight:

In Campaign 2024, healthcare affordability is an issue to likely voters. It is noticeably missing among the priorities in the hospital-backed Coalition to Strengthen America’s Healthcare advocacy platform though 8 states have already created “affordability” boards to enact policies to protect consumers from medical debts, surprise hospital bills and more.

Understandably, hospitals argue they’re victims. They depend on AHA, its state associations, and its alliances with FAH, CHA, AEH and other like-minded collaborators to fight against policies that erode their finances i.e. 340B program participation, site-neutral payments and others. They rightfully assert that their 7/24/365 availability is uniquely qualifying for the greater good, but it’s not enough. These battles are fought with energy and resolve, but they do not win the war facing hospitals.

AHA spent more than $30 million last year to influence federal legislation but it’s an uphill battle. 70% of the U.S. population think the health system is flawed and in need of transformative change. Hospitals are its biggest player (30% of total spending), among its most visible and vulnerable to market change.

Some think hospitals can hunker down and weather the storm of these 8 challenges; others think transformative change is needed and many aren’t sure. And all recognize that the future is not a repeat of the past.

For hospitals, including those in DC this week, playing victim is not a strategy. A vision about the future of the health system that’s accessible, affordable and effective and a comprehensive plan inclusive of structural changes and funding is needed. Hospitals should play a leading, but not exclusive, role in this urgently needed effort.

Lacking this, hospitals will be public utilities in a system of health designed and implemented by others.

America’s newest doctors fuel efforts to unionize

Posted on by • Posted in Health System, Hospital, Hospital Industry, Labor Shortages, Labor Union, Market Consolidation, Market Power, Physician Burnout, Physician Compensation, Physician Shortage, Physician Workforce, Physician's Labor Union • Leave a comment

https://www.axios.com/2024/04/15/doctors-union-gen-z-millennial

A new generation of doctors struggling with ever-increasing workloads and crushing student debt is helping drive unionization efforts in a profession that historically hasn’t organized.

Why it matters: 

Physicians in training, like their peers in other industries, increasingly see unions as a way to boost their pay and protect themselves against grueling working conditions as they launch their careers.

What they’re saying: 

“We deserve an increased salary to be able to afford to live in one of the most expensive areas in the United States,” said Ali Duffens, a third-year internal medicine resident at Kaiser Permanente’s San Francisco Medical Center.

  • She’s among the 400 residents at Kaiser’s Northern California system filing to unionize earlier this month.
  • Duffens earns about $82,000 per year, while paying $3,000 a month for rent and facing $350,000 in medical school loans.

The big picture: 

The Kaiser residents are part of a growing number of younger peers in medicine who have been unionizing in recent years.

  • The number of medical residents in unions has about doubled to more than 32,000 in three years, per CalMatters.
  • In the last year, residents at Montefiore Medical Center, Stanford Health Care, George Washington University and the University of Pennsylvania voted to unionize, per WBUR.
  • “The cost of day care … in a month is about half of my salary in total, and the cost of a nanny is essentially the entirety of my salary,” Leah Rethy, an internal medicine resident with Penn Medicine, told NPR last year.
  • Residents can work as much as 80 hours per week while earning far less than their older colleagues.

Yes, but: Just about 6%-7% of physicians are estimated to be in unions.

  • Historically, doctors have thought they could just suck up the long hours and relatively low pay in training as part of the tradition of medicine, said Robert Wachter, chair of the department of medicine at the University of California, San Francisco.
  • “For a new generation, they look at it and say, ‘That’s crazy. I can’t believe you did that. I want to work hard, but I also want a life and I want a family, and I want a reasonable income,'” he said.

And it’s not just younger doctors. 

Those more established in their careers are also unionizing as they see the industry changing in ways that they think undermine their profession.

  • In recent months, attending physicians at Salem Hospital, owned by Mass General Brigham, and a Cedars Sinai-owned anesthesiology practice filed to unionize.
  • About 600 doctors at Allina Health in Minnesota and Wisconsin last fall agreed to form what appears to be the largest union of private sector physicians.

Zoom in: 

The corporatization of American medicine is seen as a key driver. More than half of all U.S. doctors now work for a health system or large medical group rather than running an independent practice.

  • This shift has brought heavier workloads and less control over how they care for patients, said John August, director of health care labor relations in the Scheinman Institute on Conflict Resolution at the ILR School at Cornell.
  • That could mean demands to see more patients, limiting the time that doctors can spend with them.
  • “What you will hear from them 100% of the time in every conversation they have is they feel that they have lost control over the patient-physician relationship. I mean, every single physician says that now,” August said.

The other side: 

Health systems and large practices generally say they value their doctors and the relationships they hold with patients.

  • Hospitals have also struggled with pandemic-era financial shortfalls, including increasing labor costs.

The bottom line: 

While this is a labor issue, it ultimately trickles down to quality and safety for patients, said Rachel Flores, organizing director of the Union of American Physicians and Dentists.

  • “Patients should care because that’s less time to address their issues,” she said. “Patients should care because there’s not enough staff to support the physician.”

No appointments available: America’s escalating primary care shortage

Posted on by • Posted in Physician Compensation, Physician Shortage, Physician Workforce, Primary Care, Primary Care Workforce, Workforce Shortages, Workforce Strategy • Leave a comment
https://www.healthcaredive.com/news/no-appointments-available-americas-escalating-primary-care-shortage/712049/?utm_source=Sailthru&utm_medium=email&utm_campaign=Issue:%202024-04-15%20Healthcare%20Dive%20%5Bissue:61075%5D&utm_term=Healthcare%20Dive

Chronic disinvestment and inadequate training have created a shortage of primary care workers.

As the presidential election nears, issues from the economy to climate change are vying for airtime, yet markedly absent from the headlines is a deepening crisis that threatens the future health and wellbeing of communities nationwide: a primary care sector on the brink of collapse.  

Primary care is the cornerstone of community health. It helps us live longer lives, prevents disease and reduces health disparities. It is indispensable to strengthening our nation’s ability to withstand another deadly pandemic or climate disaster. And yet, over 100 million Americans report they lack access to a regular doctor or source of care.

Physicians and patients acutely feel the primary care workforce shortage. In recent interviews we heard an alarming refrain from clinicians and health executives: “I could spend all my time helping friends find doctors accepting new patients.” Another said, “I have 100 open staff positions and am in a bidding war for primary care physicians.”

Just in the past decade, there has been a 36% jump in the share of U.S. children without a usual source of care. Among adults it’s a 21% increase, according to a Milbank report. And with America’s rapidly aging population, access to critical primary care services is only expected to get worse. 

Understanding what’s driving America’s primary care workforce shortage is key to finding effective, long-term solutions. 

A workforce exodus amid chronic disinvestment

America is not producing enough primary care physicians to meet growing population needs. New primary care physicians are leaving for other fields at alarming rates. In 2021, only 15% of all physicians were practicing outpatient primary care three to five years after residency, according to a Milbank report. 

When we look at the disparities in compensation rates and the nation’s chronic disinvestment in primary care, this workforce exodus shouldn’t come as a surprise. Specialists in the U.S. now routinely make two to three times what their primary care colleagues do, creating powerful incentives for physicians in training to “go for the gold.” 

Primary care accounts for 35% of healthcare visits but receives only about 5% to 7% of total healthcare expenditures. For context, hospitals account for 30% of healthcare expenditures. Additionally, since 2019, the share of total spending by Medicare, Medicaid and commercial insurers in primary care has steadily declined; Medicare’s share has dropped by 15%, according to Milbank.

Inadequate training, disparities in access

Today, the vast majority of primary care residents train within hospitals and academic health centers, which do not expose them to the needs of underserved communities, nor provide them with the skills needed to successfully practice in challenging, real-world clinical environments. In 2021, only 15% of primary care residents spent a majority of their time training in community settings, outside of hospitals. 

Moving forward, the solutions are clear. Congress and both the public and private sectors must work together to enact stronger federal and state policies in three critical primary care areas. First, Medicare and Medicaid physician reimbursement — which has led to our specialty-dominated healthcare system — must become more effective and efficient. We know that inadequate compensation is one reason why many medical students choose not to go into primary care.  

Second, the billions in public dollars going to clinician training must be focused on creating a highly skilled primary care workforce with practical experience in community settings. This is essential to meet the complex health needs of our nation’s ever-changing and growing population. 

And finally, we need to expand the footprint of community health centers, the linchpin to improving health outcomes in underserved communities. Currently, these centers provide care to 1 in 11 patients around the country, but that number needs to be vastly expanded.

It’s time to strengthen our fragile primary care system to ensure it delivers the comprehensive, affordable care Americans so desperately need. Access to high-quality primary care for everyone should not be an aspiration, but an expectation that we – as a nation – have an urgent duty to fulfill.

Chasing downstream margin over downstream revenue

Posted on by • Posted in Health System, Hospital, Hospital Industry, Labor Spend Management, Operating Expenses, Operating Margin, Operating Margin Drivers, Physician Compensation, Physician Downstream Margins, Physician Employment, Physician Incentives, Physician Productivity, Physician Reimbursement • Leave a comment

https://mailchi.mp/fc76f0b48924/gist-weekly-march-1-2024?e=d1e747d2d8

A recent engagement with a health system executive team to discuss an underperforming service line uncovered a serious issue that’s becoming more common across the industry. 

“Our providers are more productive than ever,” the CFO informed our team, “and yet we keep losing money on the service line.” 

After digging into their physician compensation model, we came upon one source of the system’s issue. Because it was incentivizing physician RVUs equally across all payers, its providers responded, quite rationally, by picking up market share where growth was easiest: Medicaid patients, who weren’t generating any margin. 

“We recognize that we’ve been employing these physicians as loss leaders in order to generate downstream revenue,” the CFO shared, “but what’s the point of that revenue if there’s no longer any downstream margin?”
 


The economics of physician employment becomes a tough conversation very quickly; it’s a sensitive topic to many, and one with myriad facets. 

But the loss leader physician employment model obviously only works when it produces positive downstream margins. 

We’re in a critical window of time, where hospital margins are just beginning to recover as volumes return—but those volumes are not necessarily in the same places as before. 

The opportunity is ripe for systems to work closely with their aligned physicians to reexamine the post-pandemic margin picture for individual service lines and ensure incentives are aligning all parties to hit operating margin goals. 

Are these kinds of conversations taking place at your health system?

Where some COOs, CFOs are passing the baton

Posted on by • Posted in Health System, Hospital, Hospital Industry, Labor Spend Management, Physician Compensation, Provider Compensation Management, Provider Compensation Strategy • Leave a comment
https://www.beckershospitalreview.com/hospital-management-administration/where-some-coos-cfos-are-passing-the-baton.html?origin=CFOE&utm_source=CFOE&utm_medium=email&utm_content=newsletter&oly_enc_id=2893H2397267F7G

Nearly a quarter of health systems are appointing new executives to lead provider compensation — a function previously headed by COOs and CFOs, according to a recent report shared with Becker’s. 

That stat comes from the American Association of Provider Compensation Professionals, which recently surveyed 75 U.S. health systems and medical groups to learn more about their management methods. 

Health systems have been expanding their provider networks since the late 2000s and are continuing to work toward alignment, according to the report. Previously, COOs and CFOs might have led provider compensation strategy — but the arena has grown too complex and calls for an executive presence of its own. 

As such, a number of roles specific to provider compensation have emerged, from the executive director level up to the senior vice presidency. Nearly 25% of health systems surveyed have created a new executive position to develop and lead a provider compensation department; 93% of these departments have sole responsibility for their organization’s compensation design and 84% have full control of compensation strategy, from management of fair market value to contract management. 

“The core function of this new resource, department, and team was to build and manage compensation models developed for physicians. For many organizations, this expanded to include advanced practice providers,” the report says. “Over the years, organizations have understood the role to be much more strategic than initially proposed, which is why organizations across the country have developed roles [specific to provider compensation].”

I’m Glad I’m not a California Hospital or Practice Administrator…

Posted on by • Posted in Competition, Health System, Hospital, Hospital Industry, Law, Non-Compete Agreements, Physician Compensation, Physician Contracts, Physician Employment, Retention, Talent Competition, Talent Management, Talent Pipelines • Leave a comment
https://www.linkedin.com/pulse/im-glad-california-hospital-practice-administrator-k-todd-phd-mha-f77ec/?midToken=AQHcpzuK5TbmJA&midSig=2Qnh-g7b4aiX41&trk=eml-email_series_follow_newsletter_01-newsletter_hero_banner-0-open_on_linkedin_cta&trkEmail=eml-email_series_follow_newsletter_01-newsletter_hero_banner-0-open_on_linkedin_cta-null-fll5j~lqpddslo~9-null-null&eid=fll5j-lqpddslo-9&otpToken=MTAwMzFjZTAxMzJhY2FjNWJlMmYwMmVhNDUxOWUwYjM4NmNjZDA0MDliYWM4NTZmNzJjZTAwNmI0NjUyNTlmNGZjYTY5NTg1NTFlNmNlZDk2Yzk2Yjc2N2RjZjM4MjA5ZGRjZjYzNTdiMWNlMDdiZmUyLDEsMQ%3D%3D

On January 1st, 2024 #AB1076 and #SB699, two draconian noncompete laws go into effect. It could put many #employedphysicians in a new position to walk away from #employeeremorse.

AB1076 voids non-compete contracts and require the employer to give written notice by February 14th, 2024 that their contract is void.

Is this a good or bad thing? It depends.

If the contract offers more protections and less risk to the employed physician, and the contract is void – does that mean the whole contract is void? Or is the non-compete voidable?

But for the hospital administrator or practice administrator, we’re about to witness the golden handcuffs come off and administrators will have to compete to retain talent that could be lured away more easily than in the past. But the effect of the non-compete is far more worrisome for an administrator because of the following:

The physicians many freely and fairly compete against the former employer by calling upon, soliciting, accepting, engaging in, servicing or performing business with former patients, business connections, and prospective patients of their former employer.

It could also give rise to tumult in executive positions and management and high value employees like managed care and revenue cycle experts who may have signed noncompete contracts.

If the employer does not follow through with the written notice by February 14th, the action or failure to notify will be “deemed by the statute to be an act of unfair competition that could give rise to other private litigation that is provided for in SB699.

The second law, SB699, provides a right of private action, permitting the former employees subject to SB699 the right to sue for injunctive relief, recovery of actual damages, and attorneys fees. It also makes it a civil violation to enter into or enforce a noncompete agreement. It further applies to employees who were hired outside California but now work in or through a California office.

What else goes away?

Employed physicians can immediately go to work for a competitor and any notice requirement or waiting period (time and distance provisions) are eliminated by the laws. So an administrator could be receiving “adios” messages on January 2nd, and watch market share slip through their fingers like a sieve starting January 3rd.

And what about the appointment book? Typically, appointments are set months in advance, especially for surgeons – along with surgery bookings, surgery block times, and follow up visits.

Hospitals may be forced to reckon with ASCs where the surgeons could not book cases under their non-compete terms and conditions. They could up and move their cases as quickly as they can be credentialed and privileged and their PECOS and NPPES files updated and a new 855R acknowledged as received.

Will your key physicians, surgeons and APPs leave on short notice?

APPs such as PAs and NPs could also walk off and bottleneck appointment schedules, surgical assists, and many office-based procedures that were assigned to them. They could also walk to a new practice or a different hospitals and also freely and fairly compete against the former employer by calling upon, soliciting, accepting, engaging in, servicing or performing business with former patients, business connections, and prospective patients of their former employer.

Next, let’s talk about nurses and CRNAs. If they walk off and are lured away to a nearby ASC or hospital, or home health agency, that will disrupt many touchpoints of the current employer.

Consultants’ contracts are another matter to be reckoned with. In all my California (and other) contracts, contained within them are anti-poaching provisions that state that I may not offer employment to one of their managed care, revenue cycle, credentialing, or business development superstars. Poof! Gone!

The time to conduct a risk assessment is right now! But many of the people who would be assigned this assessment are on holiday vacation and won’t be back until after January 1st. But then again, they too could be lured away or poached.

What else will be affected?

Credentialing and privileging experts should be ready for an onslaught of applications that have to be processed right away. They will not only be hit with new applications, but also verification of past employment for the departing medical staff.

Billing and Collections staff will need to mount appeals and defenses of denied claims without easy access they formerly had with departing employed physicians.

Medical Records staff will need to get all signature and missing documentation cleared up without easy access they formerly had with departing employed physicians.

Managed Care Network Development experts at health plans and PPOs and TPAs will be recredentialing and amending Tax IDs on profiles of former employed physicians who stand up their own practice or become employed or affiliated with another hospital or group practice. This comes at an already hectic time where federal regulations require accurate network provider directories.

The health plans will need to act swiftly on these modifications because NCQA-accredited health plans must offer network adequacy and formerly employed physicians who depart one group but cannot bill for patient visits and surgeries until the contracting mess is cleared up does not fall under “force majeure” exceptions. If patients can’t get appointments within the stated NCQA time frames, the health plan is liable for network inadequacy. I see that as “leverage” because the physician leaving and going “someplace else” (on their own, to a new group or hospital) can push negotiations on a “who needs whom the most?” basis. Raising a fee schedule a few notches is a paltry concern when weight against loss of NCQA accreditation (the Holy Grail of employer requirements when purchasing health plan benefits from a HMO) and state regulator-imposed fines. All it takes to attract the attention of regulators and NCQA are a few plan member complaints that they could not get appointments timely.

Health plans who operate staff model and network model plans that employ physicians, PAs and NPs (e.g., Kaiser and others who employ the participating practitioners and own the brick and mortar clinics where they work) are in for risk of losing the medical staff to “other opportunities.” These employment arrangements are at a huge risk of disruption across the state.

Workers Compensation Clinics that dot the state of California and already have wait times measured in hours as well as Freestanding ERs and Freestanding Urgent Care Clinics could witness a mass exodus of practitioners that disrupt operations and make their walk in model inoperative and unsustainable in a matter of a week.

FQHCs that employ physicians, psychotherapists, nurse practitioners and physician assistants could find themselves inadequately staffed to continue their mission and operations. Could this lead to claims of patient abandonment? Failed Duty of Care? Who would be liable? The departing physician or their employer?

And then, there are people like me – consultants who help stand up new independent and group practices, build new brands, rebrand the physicians under their own professional brands, launch new service lines like regenerative medicine and robotics, cardiac and vascular service lines, analyze managed care agreements, physician, CRNA, psychotherapist, and APP employment agreements. There aren’t many consultants with expertise in these niches. There are even fewer who are trained as paralegals, and have practical experience as advisors or former hospital and group practice administrators (I’ve done both) who are freelancers. I expect I will become very much in demand because of the scarcity and the experience. I am one of very few experts who are internationally-published and peer-reviewed on employment contracts for physicians.

Indiana system to pay $345M in case tied to physician pay

Posted on by • Posted in Corporate Integrity Agreement, Dept of Health and Human Services (HHS), False Claims Act, Health System, Lawsuit, Lawsuit Settlement, Leadership Integrity, Leadership Intent, Patient Referrals, Patient Volume, Physician Compensation, Whistleblower Lawsuit • Leave a comment
https://www.beckershospitalreview.com/legal-regulatory-issues/indiana-system-to-pay-345m-in-case-tied-to-physician-pay.html?origin=CFOE&utm_source=CFOE&utm_medium=email&utm_content=newsletter&oly_enc_id=2893H2397267F7G

Indianapolis-based Community Health Network has agreed to a $345 million settlement to resolve allegations that, dating back to 2008, it violated the False Claims Act and Stark law.

The settlement, announced Dec. 19, stems from a whistleblower complaint filed in 2014 by the nonprofit health system’s former CFO and COO under the qui tam provisions of the False Claims Act. 

The United States filed suit against CHN in 2020, alleging that the system violated the False Claims Act by knowingly submitting claims to Medicare for services that were referred in violation of the Stark law, which requires that the compensation of employed physicians be fair market value and cannot account for the volume of referrals. 

The U.S. complaint alleged that, starting in 2008, CHN’s senior management engaged in a scheme to recruit physicians for employment with outsized pay in an effort to secure profitable referrals. The salaries offered to cardiologists, cardiothoracic surgeons, vascular surgeons, neurosurgeons and breast surgeons for CHN employment were sometimes up to double what physicians earned in private practices, the complaint alleged. 

The government alleged that CHN provided false compensation information to a valuation firm, ignored the consultants’ warnings about legal risks of overcompensation and awarded bonuses to physicians based on their referrals to providers within the CHN network. 

CHN said the $345 million settlement will be paid from its reserves, which reported operating revenue of $3.1 billion in 2022. The nonprofit system has more than 200 sites of care and affiliates throughout Central Indiana, including 10 hospitals. 

“This is completely unrelated to the quality and appropriateness of the care Community provided to patients,” CHN Spokesperson Kris Kirschner said in a statement shared with Becker’s. “This settlement, like those involving other health systems and hospitals, relates to the complex, highly regulated area of physician compensation. Community has consistently prioritized the highest regulatory and ethical standards in all our business processes.” 

The system said it “has always sought to compensate employed physicians based on evolving industry best practices with the advice of independent third parties” and “has always sought to provide complete and accurate information to our third-party consultants.” 

“When doctors refer patients for CT scans, mammograms or any other medical service, those patients should know the doctor is putting their medical interests first and not their profit margins,” Zachary Myers, U.S. attorney for the Southern District of Indiana, said in the Justice Department news release. 

“Community Health Network overpaid its doctors. It also paid doctors bonuses based on the amount of extra money the hospital was able to bill Medicare through doctor referrals,” Mr. Myers said. “Such compensation arrangements erode patient trust and incentivize unnecessary medical services that waste taxpayer dollars.”  

Under the settlement, CHN will enter into a five-year corporate integrity agreement with HHS in addition to its $345 million payment to the U.S.

Sweeping health reform takes a back seat for this election cycle

Posted on by • Posted in 2024 Election Issues, Cost Management, Cost Reduction, Health Policy, Health System, Healthcare Reform, Hospital, Hospital Industry, Medicare for All, Medicare Site Neutral Payment, Physician Compensation • Leave a comment

https://mailchi.mp/79ecc69aca80/the-weekly-gist-december-15-2023?e=d1e747d2d8

After a presentation this week, a senior physician from the audience of our member health systems reached out to discuss a well-trod topic, the future of health reform legislation. But his question led to a more forward-looking concern: 

“You talked very little about politics, even though we have an election coming up next year. Are you anticipating that Medicare for All will come up again? And what would the impact be on doctors?” 

As we’ve discussed before, we think it’s unlikely that sweeping health reform legislation like Medicare for All (M4A) would make its way through Congress, even if Democrats sweep the 2024 elections—and it’s far too early for health systems to dedicate energy to a M4A strategy.

Healthcare is not shaping up to be a campaign priority for either party, and given the levels of partisan division and expectations that slim majorities will continue, passing significant reform would be highly unlikely. 

Although there is bipartisan consensus around a limited set of issues like increasing transparency and limiting the power of PBMs, greater impact in the near term will come from regulatory, rather than legislative, action. 

For instance, health systems are much more exposed by the push toward site-neutral payments. How large is the potential hit? One mid-sized regional health system we work with estimated they stand to lose nearly $80M of annual revenue if site-neutral payments are fully implemented—catastrophic to their already slim system margins.

Preparing for this inevitable payment change or the long-term possibility of M4A both require the same strategy: serious and relentless focus on cost reduction.

This still leaves a giant elephant in the room: the long-term impact on the physician enterprise. 

As referral-based economics continue to erode, health systems will find it increasingly difficult to maintain current physician salaries, further driving the need to move beyond fee-for-service toward a health system economic model based on total cost of care and consumer value, while building physician compensation around those shared goals.

Medicare finalizes physician pay cuts as Congress considers stepping in

Posted on by • Posted in American Medical Association (AMA), Center for Medicare and Medicaid Services (CMS), Medicare Payment Advisory Commission (MedPAC), Medicare Reimbursement, Physician Compensation, Physician Fee Schedule, Primary Care • Leave a comment

https://mailchi.mp/f12ce6f07b28/the-weekly-gist-november-10-2023?e=d1e747d2d8

Last week, the Centers for Medicare and Medicaid Services (CMS) issued the final 2024 Physician Fee Schedule, which reduces overall payment rates for physicians by 1.25 percent, including a 3.4 percent decrease in the conversion factor for relative value units, compared to 2023. 

The rule also implements a new add-on payment for complex evaluation and management visits, which is expected to boost pay for primary care physicians.

The American Medical Association (AMA) strongly opposes these cuts and immediately appealed to Congress for a reprieve. In response, the Senate Finance Committee unanimously advanced a bill to the Senate floor that would reduce the conversion-factor rate cut from 3.4 percent to 2.15 percent, while also delaying reductions in Medicaid disproportionate share funding for safety-net hospitals. Senate Majority Leader Chuck Schumer (D-NY) has indicated he intends to assemble a broad healthcare bill, including some or all of these provisions, by the end of this year. 

The Gist: Physicians were hopeful that inflation’s toll on labor and supply costs would earn them a break from continued Medicare pay cuts, but CMS remains committed to reductions within its budget neutrality framework.

Earlier this year, the Medicare Payment Advisory Commission (MedPAC) recommended for the first time that physician payments be tied to an index of physician practice inflation, but that would require legislative intervention, which Congress has not taken up. 

The AMA calculated that Medicare physician pay has lagged inflation by 26 percent since 2001, pointing to burnout and large numbers of physicians exiting the profession as a result. 

Until calls for Medicare payment reform are heeded, physicians, like health systems, will have to adopt new, lower-cost models of care to cope with what they will continue to see as insufficient reimbursements.

Physician Flash Report: Q3 2023

Posted on by • Posted in Physician Compensation, Physician Productivity, Physician Subsidy • Leave a comment
https://www.kaufmanhall.com/insights/research-report/physician-flash-report-q3-2023?utm_source=mkto&utm_campaign=physician-report&utm_medium=em&utm_term=q3-231102&mkt_tok=NjU0LUNOWS0yMjQAAAGPL9fvKzCCo1yvOrGiSvhy0-t5–VjENs1Ks4XXQJpQy7Z-G6Vx0UmDTOTaG6FKy-rttEiqWJglijrIfiQmyiVBmAI2zvwD0HdugwfVHjZ7iHm

Above Chart: Q3 2023 Key Performance Metrics Summary

Physicians are operating at record-high levels of productivity compared to recent years but receiving less pay per unit of work. The median investment/subsidy per provider continues to increase, but the pace is slowing with only a 1% change from Q3 2022 to Q3 2023.

The October issue of the Physician Flash Report features the most up-to-date industry trends drawn from the same data physician groups use to track their finances and operations. For more detailed benchmarks by specialty or custom peer groups, please email PhysicianFlashReport@kaufmanhall.com.

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