Jeff Finkelstein
James Lifton
Claudio Capone

Emergency department physician compensation plans should be designed to improve quality, productivity, and patient satisfaction.


At a Glance

Redesigning a physician compensation system in the emergency department (ED) should include goals of improving quality, productivity, and patient satisfaction. Tips for hospital administrators:
 

  • A contemporary ED information system is needed to ensure that the ED is essentially a paperless operation.  
  • Transparency, internally and externally, is essential.  
  • ED physicians should perform as individuals, yet as members of a team. Incentives, especially incentive compensation, should strike a balance between individual and team performance.  

There are 4,600 hospital emergency departments (EDs) in the United States, staffed by 32,000 emergency physicians who collectively serve as the lynchpin for more than 115 million patient visits annually. These physicians diagnose and treat patients they have never seen before, often with little or no information about these patients' medical histories and circumstances. ED physicians also may be responsible for securing specialty consultations, coordinating and evaluating ancillary tests, and arranging for patient admissions or transfers. Their decisions affect not only the ED's quality of care, patient satisfaction, and financial performance, but also the hospital's overall reputation.

As a key factor in defining ED performance, physician performance is, in turn, influenced by physician compensation. The experiences of one East Coast health system, The Hospital of Central Connecticut (HCC), demonstrate that a well-designed compensation plan can provide incentives to emergency physicians to respond appropriately to the many challenges in this complex practice setting.

Approaches to Compensating ED Physicians

ED staff physicians typically have multiple components to their compensation. A recent survey by Daniel Sterns & Associates (see the exhibit below) looking at data from 2006 and 2009 found that:

  • Nearly all physicians (93 percent) are paid a wage or salary
  • Two out of every three physicians (67 percent), up from 50 percent three years ago, have a productivity component
  • Four out of every 10 physicians (41 percent) have some stake in the financial performance of their group and/or the ED itself
  • Patient satisfaction is a small but growing component of emergency physician compensation, with 20 percent of physicians reporting that at least part of their pay was tied to patient satisfaction in 2009, compared with 11 percent of physicians in 2006

HCC's Story

HCC is a two-campus system formed in 2006 after the merger of New Britain General and Bradley Memorial hospitals. The two campuses are 10 miles apart. New Britain General is located in an urban area, and faces challenges typical of much of the industrial northeast, while Bradley Memorial is located in a more residential part of the service area.

ED volume at New Britain General increased from 54,000 visits in FY01, to 58,000 visits in FY04, to 88,000 visits in FY10. Visits to Bradley Memorial went from 14,000 in FY01, to 14,500 in FY04, to 18,000 in FY10.

Emergency physicians are employees of HCC. Historically, salaries were based on tenure and subjective physician ratings. The same group of physicians staffs both hospitals and most physicians rotate between campuses.

ED patient satisfaction surveys are conducted for HCC on an ongoing basis at both campuses, with results tabulated and reported quarterly. Results are reported for the department and for physicians as a group and individually.

In 2004, ED productivity, patient satisfaction, and physician turnover were judged as acceptable, but having room for improvement. A new medical director was appointed and the organization's leadership made a commitment to improve ED performance.

In addition to the change in ED leadership, HCC made a commitment to providing the tools necessary to deliver state-of-the-art emergency care. Paper records and a white board were replaced by information systems, and the New Britain facility was expanded. Communication was enhanced through electronic applications, including wait times posted on the HCC website and available by iPhone.

Finally, and essentially, the physician compensation plan was redesigned to provide the incentives that leadership believed was necessary for improved ED performance.

Designing the Compensation System

The process began with discussions among HCC's administrators and ED leaders on how to redesign the physician compensation system. The leaders agreed that the goals of the redesign process should be to improve quality, productivity, and patient satisfaction in the ED. HCC's administrators recognized the importance of involving ED staff physicians in the process, and they continue to include the physicians in decisions about the physician compensation system.

Exhibit  

f_finkelstein

The first step of the process was to equalize the base salary for all physicians to provide an income guarantee and guard against low volume during shifts. The rationale for creating equal base salaries was that seniority alone does not necessarily correlate with higher quality, productivity, or patient satisfaction, and therefore should not be compensated directly. Experienced physicians can increase their earnings to the extent that they are able to care for emergency patients either in greater numbers or with more complex conditions, or both, while also maintaining patient satisfaction. Also, because physicians remain hospital employees, seniority is indirectly rewarded through accrual of retirement benefits.

The incentive compensation pool includes components on productivity (75 percent) and patient satisfaction (25 percent) and is distributed quarterly.

The system rewards higher productivity through incremental increases in compensation. The incremental pay component was structured to be funded by 60 percent of the revenue generated by an increase in relative value units (RVUs) above the baseline volume. Productivity is measured by RVUs, with the procedure code for each patient seen in the ED assigned a predetermined number of work RVUs. Work RVUs incorporate factors such as time, skill, and judgement required of a physician to care for a patient.

Physicians also must meet certain standards for quality to practice in HCC's ED, but meeting those standards is not a means to earning incremental compensation. The standards were set based on parameters developed by other organizations and recognized (e.g., by The National Quality Forum) as indicators of quality care.

HCC initially adopted five standards and added another five indicators. Physicians are required to meet benchmarks for eight of the 10 standards to be eligible for any incremental pay. Physicians who fall short are placed on a performance improvement plan for the following quarter. Any physician who fails to meet the quality benchmarks for a second consecutive quarter is asked to step down.

For any physician to receive incentive compensation related to patient satisfaction, the entire physician group must be at or above the 70th percentile on each quarterly report on patient
satisfaction.

Results of the Redesigned Compensation System

The tailored compensation system for emergency physicians at HCC, along with other ED improvements (e.g., facilities, electronic medical records) has improved ED quality, productivity, and patient satisfaction. Productivity remains high enough to generate an incremental pay pool. Quality benchmarks are routinely met, enabling physicians to qualify for incremental compensation increases.

In 2004, ED patient satisfaction was below the 70th percentile. In five of the past six quarters at New Britain, patient satisfaction with physicians was above the 90th percentile, twice reaching the 99th percentile. Patient satisfaction with the ED physicians at Bradley was above the 90th percentile in four of the past six quarters, falling just below the 90th percentile in the other two quarters.

Many other improvements have been noted:

  • Wait times have decreased, a factor in both patient satisfaction and in quality of care.
  • Physician productivity has increased, resulting in increased patient volume and decreased wait times.
  • Physician and support staff satisfaction have increased.
  • HCC primary care physicians are more satisfied with the ED.
  • ED physician turnover has decreased while the quality of applicants has increased.

Three Lessons Learned

HCC's leaders regard the initiative to redesign the compensation system for the organization's physicians as a success, as both physician performance and patient satisfaction have improved significantly as a result of the initiative. They also point to three important lessons learned during the process, apart from the specifics of designing a new compensation system.

A contemporary ED information system is essential. The information system should function so that the ED, with few exceptions (such as printed discharge instructions), becomes a paperless operation. Timely and accurate information supports high-quality patient care and provides the basis for measuring departmental and individual physician performance.

Transparency, internally and externally, is essential. HCC's emergency service maintains its own website (www.thoccer.com). Public pages include news stories, educational information, and several links. Emergency physicians can log in to private pages to view individual patient satisfaction and productivity reports. ED wait times for both campuses are posted on the home page of HCC's main website (www.thocc.org).

Emergency physicians need to perform as individuals, yet as members of a team. Incentives, especially incentive compensation, should strike a balance between individual and team performance. At HCC, the new compensation plan changed the mentality of ED physicians, transforming them from employees into owners, in effect creating a virtual private practice.


Jeff Finkelstein, MD, is chief medical information officer and chief of emergency medicine, The Hospital of Central Connecticut, New Britain, Conn. (jfinkelstein@thocc.org).

James Lifton, FACHE, is principal, Lifton Associates, LLC, Park Ridge, Ill. (jim@liftonassociates.com).

Claudio Capone is director of strategic business planning, The Hospital of Central Connecticut, New Britain, Conn. (ccapone@thocc.org).


 

Sidebar

ED Quality Standards and Benchmarks
Quality measures were adopted from the Physician Quality Reporting Initiative and other programs developed to promote quality care in the emergency department (ED). Physicians at The Hospital of Central Connecticut are expected to meet the benchmarks indicated in parentheses for the following 10 quality standards:

  • Heart attack patients given aspirin at arrival (95 percent)
  • Blood culture performed on pneumonia patients prior to administering antibiotics (90 percent)
  • Pneumonia patients given initial antibiotic within six hours (80 percent)
  • Pneumonia patients given the most appropriate antibiotic (90 percent)
  • Women with abdominal pain, age 15-50, tested for human chorionic gonadotropin (90 percent)
  • Swallow study performed on stroke patients prior to anything given by mouth (90 percent)
  • Mental status documented and reviewed (90 percent)
  • Vital signs documented and reviewed (90 percent)
  • Pulse oximetry results documented and reviewed (90 percent)
  • Reason documented for not administering TPA to patients with stroke (97 percent)

     

Publication Date: Wednesday, June 01, 2011

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