1. Creative Compensation for Hospitalists John Nelson, MD Principal, Nelson Flores Hospital Medicine Consultants Medical Director, Hospitalist Practice Overlake Hospital, Bellevue, WA john.nelson@nelsonflores.com (425) 467-3316

2. Part 1: the amount of compensation…

3. Compensation* *Non-academic hospitalists caring for adults; includes bonuses $246,000 $213,000 $224,000 $212,000 N=726 ~3% increase over prior year

4. 1,745 enc 3,892 wRVUs 1,928 enc 3,858 wRVUs 2,297 enc 4,092 wRVUs 2,747 enc 4,931 wRVUs Annual Productivity per FTE enc = billable encounters Minimal change from prior year

5. *Compensation per wRVU $55 $56 $52 $54 Juice to Squeeze Ratio*

6. Compensation as a Function of Productivity Comp per wRVU Less productive hospitalists More productive hospitalists

7. Part 2: The method of compensation

8. Mix salary components as you see fit Compensation Method FixedPerformanceProduction

9. Mix salary components as you see fit Compensation Method Fixed Performance Production My bias: Largest component based on production Significant performance (quality) component (at least 15 – 10% of total comp) Small (or 0) fixed component (instead put in place a 1 or 2 yr. minimum salary guarantee for new docs)

10. Reasons hospitalists are averse to significant production compensation The FearAn alternative view Can’t control daily patient volumeReasonably precise control of workload/compensation over long period of time by managing staffing levels Will disrupt cohesive culture - will lead to competing with one another for the next patient Makes it much easier to trade work between group members – promotes cohesion It is just a way to get hospitalists to work unreasonably hard, leading to poor patient care and burnout It provides each doctor some flexibility to make individual choices about how hard he/she wants to work Will lead to increased LOS, since hospitalists can increase income by keeping pts in hospital longer A legitimate concern, but not likely to happen unless the practice is overstaffed Will adversely affect recruitingIt will unless you can explain to recruits why the hospitalists believe it is a good thing

11. Quality incentive Use metrics you’re already measuring Rotate metrics (annually?) Compensate on a sliding scale rather than all or none Most quality metrics lend themselves to group (vs. individual) payment Not worth implementing if too easy/difficult to achieve

12. References Results of SHM 2008 survey of incentive compensation and discussion of designing a quality incentive: http://www.the-hospitalist.org/details/article/184556/Bonus-Pay_Bonanza.html Meeting on November 4, 2011, in Las Vegas on implications of the adoption of the hospitalist model of practice by many specialties in medicine: http://www.hospitalmedicine.org/Content/NavigationMenu/Events/HospitalFoc usedPractice/home.htm