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Most employed healthcare provider groups operate under the axiom that productive providers create financial success. After all, the reasoning follows, seeing patients will generate revenue. And seeing a lot of patients will generate more revenue. Practice managers have therefore obsessed over work relative value units (wRVUs), building measurement systems and provider compensation plans around them in an effort to maximize productivity. But like many things in health care, the definition of productivity is changing. As such, forward-thinking organizations are beginning to rethink the way they measure and use such productivity data.
Specifically, successful hospitals and health systems are incorporating these four ideas into their strategies.
As more physicians have become employed under wRVU-based contracts, it's natural for physicians and practice managers to focus primarily-and in some instances, exclusively-on wRVUs to measure productivity.
Yet wRVUs alone won't provide a relevant picture of performance. A more accurate analysis of productivity should include other variables that have impact: practice revenue, visits, patient contact hours, and panel size. What's more, because all of these measures are interconnected, they should be studied together to obtain a more complete picture of how the practice is operating. Consider, for example, a practice where wRVUs and visits are above the median, but revenue is below the 25th percentile. If leaders view only the wRVU, they might simply evaluate the practice as performing above average without recognizing a potential revenue cycle problem that may be occurring. Similarly, the wRVU alone shouldn't be a determinant of productivity, as ineffective care leading to patient churn can generate high wRVUs. For example, a physician who sees 2,000 patients three times per year likely is performing more efficiently than a peer who sees 500 patients every month with some of those visits being superfluous.
Also, wRVUs shouldn't always receive chief weight. One community hospital has had particular success with its acquisition strategy by prioritizing patient panel size in addition to wRVUs. In a market where many physicians remain independent, the hospital sought to bolster its primary care base as a step toward improving cross-continuum competencies needed for efficient population health management. Initially, it focused on acquiring practices chiefly based on high wRVU performance. However, the management team began to question the criterion, as the cost was unsustainably high and the employed primary care network wasn't covering a large enough patient population. By changing its approach to focus less on wRVUs and more on patient panel sizes, the team was better able to select groups that were appropriately and efficiently serving large patient populations. These physicians were providing more efficient care, and thus were much better candidates for the organization's growth strategy and ultimately for driving value when managing patient populations.
Comparison of Productivity Measurement Methodologies
Also important for better understanding productivity is leaders' appropriate use of comparative data. Many organizations recognize that benchmarking is the key to having meaningful productivity discussions. For example, sharing that a physician produced 800 wRVUs the past quarter isn't nearly as informative as relaying that this performance is below 80 percent of similar physicians.
Although comparing performance to benchmarks can add tremendous context, organizations should exercise caution with how the data are used. Specifically, it is crucial to ensure that format, timing, and definitions of the input data are consistent with the parameters used to determine the benchmarks. When comparing wRVUs, for example, leaders should make sure that appropriate adjustments have been made for modifiers and that calculations have been performed with the appropriate Centers for Medicare & Medicaid Services fee schedule. Failure to account for these factors when viewing comparative data can lead to inaccurate conclusions.
In addition, leaders should ensure performance is compared against only meaningful and representative peer groups. For relevant comparisons, there must be enough similarities between the organization and the source of the external benchmark. For example, small-group practices may find greater value in using productivity benchmarks supplied by the Medical Group Management Association (MGMA) than by the American Medical Group Management Association (AMGMA), because 80 percent of those whom MGMA surveys about productivity are in groups of less than 10 physicians. In contrast, 55 percent of those whom the AMGMA surveys about productivity are in groups of 100 or more physicians.
As patient demand increases and a physician shortage looms, many organizations are successfully using advanced practitioners to extend the clinical reach of their physician network, particularly in areas such as primary care, cardiology, and orthopedic surgery practice.
Although advanced practitioners can contribute significantly to physician productivity, this contribution isn't always recognized when tracking direct wRVUs. As an example, an orthopedic physician assistant who sees post-surgery patients during the global period won't generate wRVUs, even though the assistant provides substantial benefit by allowing the physician to spend more time in the operating room.
To better capture the direct and indirect productivity contributions from advanced practitioners, organizations should focus on total wRVUs from the combined provider team (as noted on p. 33). This approach acknowledges that even when advanced practitioners work in a practice model that is not conducive to independent wRVU generation, they can still increase physician wRVUs.
Lastly, organizations should look for opportunities to view wRVUs and other productivity data as a means to elevate strategy. All too often productivity analysis is seen solely as an operational issue, with leaders simply seeking to recognize and appropriately compensate providers by level of productivity. Yet viewing productivity data in combination with financial and market data can provide valuable business insights.
As an example, one Midwest community hospital sought opportunities to improve its primary care presence as a means to enhance patient access and increase market share. As demonstrated in the exhibit "Strategic Productivity Analysis," leaders examined practice productivity against industry benchmarks for its employed primary care practices in combination with data pertaining to market share, demographic patterns, and drive-time analysis. Having all of this information together allowed the hospital leadership team to quickly understand the competitive and operational opportunities within the market. The hospital was able to consolidate neighboring practices with low productivity and reallocate provider resources to favorable areas with high-productivity demands. The network's best providers were placed in highly competitive market zones, and new practice locations were developed in strategic areas. Overall, this effort has resulted in more efficient provider network operations, increased hospital market share, and strengthened financial performance.
The healthcare landscape is increasingly complex. Employed provider networks need to understand the productivity of physicians within the context of other performance factors, the changes in productivity that occur with diverse care teams, and the ways they can leverage their most efficient providers to meet changing care delivery and competitive demands. Those organizations that can move beyond traditional views of the wRVU to accommodate these next-era productivity needs can best position themselves for success.
Eric Andreoli is senior consultant, Healthcare Strategy Group, Louisville, Ky.
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