In the wake of healthcare reform, one thing is certain — by 2014, 32 million additional Americans are going to have health insurance, and someone will need to take care of them.
Who will provide medical care to millions of newly-insured people? When Massachusetts made health insurance mandatory, physician practices were overwhelmed by the increased demand. Many doctors stopped taking new patients, and those who continued to accept new patients saw waiting times for appointments lengthen significantly. Visits to emergency rooms went up 7 percent, adding unanticipated costs to the program. To avoid repeating this pattern nationally, physician practices and hospitals employing physicians must proactively add capacity to treat large numbers of new patients.
Ideally, every new patient will have access to a primary care physician they see on a regular basis to help them maintain good health and to prevent unnecessary emergency room visits. But primary care physicians are already in short supply. The American Academy of Family Physicians predicts a shortfall of 40,000 primary care physicians by 2020. Moreover, the U.S. Bureau of Health Professions projects a shortage of 109,600 physicians in all specialties by 2020. Given the long timeframe required to educate new physicians, it seems certain that mid-level providers — physician assistants, nurse practitioners, and others — will be needed to fill the gap.
Where are mid-level providers practicing today?
Today, roughly 80,000 NPs and 30,000 PAs work in a variety of settings around the country. They have traditionally provided care in rural and underserved settings, where they work under the supervision of a physician who may or may not be located in the same office or community. In these settings, mid-level providers diagnose and treat a broad range of routine medical conditions, referring the more complicated cases to the supervising physician. In our modern healthcare marketplace, clinics located in pharmacies and other retail locations are often staffed with mid-level providers serving in this traditional role.
Over the last 30 years, roles of mid-level providers have expanded well beyond the primary care environment. Today, mid-level providers work in hospitals, emergency departments, inpatient and outpatient surgical facilities and in specialty practices such as cardiology and oncology, as part of the team that serves patients receiving ongoing treatment. It is often a mid-level provider who monitors fragile diabetics, sees cancer patients between treatments, sets bones in the ED or closes for the doctor after surgery.
How are mid-level providers paid?
IHStrategies’ proprietary compensation database shows that mid-level providers are nearly always paid a base salary based on years of experience, with shift differentials, overtime pay, and additional payments for taking call. Less than half of organizations in our database report using incentive plans that reward individual or team performance. Mid-level providers participate in standard, all-employee benefit plans and receive additional continuing medical education benefits — some combination of tuition reimbursement, paid time off for exams, expenses for attending medical conferences, professional dues and subscriptions and reimbursement of exam or licensure fees.
At the national level, NPs, PAs, and nurse midwives are paid fairly comparably, as shown in the table below.
TOTAL ANNUAL CASH COMPENSATION
IHStrategies has found that NPs and PAs in surgical and other select medical sub-specialties are paid 5 percent to 15 percent more than their primary care counterparts. Even so, salaries for mid-level providers are lower than those of physicians. This suggests that mid-level providers may represent an option for increasing the capacity of physician specialty practices without greatly increasing payroll costs.
Unlike physicians, most mid-level providers do not have incentive plans based on productivity today. But as the contributions of mid-level providers grow in importance to physician practices, we expect productivity-based compensation plans for this group to become more commonplace.
Changing Roles of Mid-Level Providers
There is no question that hospitals and physician practices will need to change the way they deliver care as the healthcare environment continues to evolve. The aging of our population, looming shortages of physicians and nurses, and increasing access to health insurance all point to needing to care for more patients with fewer providers. According to the American Hospital Association, hospitals will need to redesign work processes and introduce new technologies to increase efficiency, effectiveness and employee satisfaction; retain existing workers, including those able to retire; and attract a new generation of workers if they are going to have an adequate workforce in the coming years. Physician practices will face the same challenges.
The introduction of accountable care organizations and the anticipated shift in reimbursement from fee-for-service to payments for episodes of care will demand greater efficiency and a renewed emphasis on outcomes. The concept of the “medical home” will require a team approach and greater coordination between health professionals who deliver care in a seamless manner.
There are compelling reasons to consider expanding the roles of NPs and PAs in both hospitals and physician practices. The timeframe for educating mid-level providers is much shorter than the timeframe for educating physicians, making it easier to increase their presence in the workplace quickly. Organizations can recruit mid-level providers directly from the medical schools and nursing schools that train them, or can identify good candidates from their own staffs and offer them the additional training they need to step into the role.
Mid-level providers are cost-effective in primary care settings, where they can relieve physicians of the necessity of providing routine care. This approach enriches the work experience for physicians, enhancing retention. Mid-level providers are also cost-effective in specialty practice settings, providing much of the medical care patients need while allowing physicians to focus more attention on the complex issues that make the best use of their knowledge and experience.
Including NPs and PAs on the clinical staff can enhance scheduling flexibility and make it easier to offer part-time jobs without compromising quality of care. This may help attract and retain physicians beyond normal retirement age and women physicians who are reluctant to commit to full-time schedules.
As NPs and PAs take on expanded roles similar to those of physicians, we expect incentive plans to become a standard component of pay, although awards will be more modest in size than those of physicians. Like physicians, we expect mid-level providers to receive incentive awards for productivity, patient satisfaction, adherence to quality standards and achievement of other organizational goals. The design of compensation programs for mid-level providers will also influence the design of programs for the physicians who supervise them.
Looking Ahead
In the near future, the medical community will be expected to serve more patients with fewer physicians. This reality will require a redesign in the way medical care is delivered, and mid-level providers will likely play a bigger role than they do today. As your organization plans for these changes, consider these questions:
• Where will your organization get enough providers to see an influx of new patients?
• Will mid-level providers be part of the solution to physician shortages in your organization?
• What strategies will you adopt to recruit and retain the mid-level providers you need?
• How will your compensation package for mid-level providers help your organization stand out in a tight labor market?
• If you think of NPs and PAs as part of your physician staff, instead of your nursing staff, should you pay them differently than you do today? Should you add incentive pay or other benefits?
• How will your organization compensate physicians for supervising mid-level providers?
• What is the appropriate relationship between physician pay and mid-level provider pay?
The way your hospital or health system answers these questions may determine how successful you are in meeting the demands of a new healthcare marketplace.
Integrated Healthcare Strategies provides not-for-profit healthcare organizations with direct access to a comprehensive array of healthcare-specific services, delivered by professionals from the industry who understand the rigors of running a healthcare organization – from the lunchroom to the Board Room. Integrated Healthcare Strategies specializes in the areas of physician strategy and compensation, employee compensation, executive compensation, human capital solutions, labor relations, leadership transition planning, executive search, employee surveys, performance management and board governance solutions. For more information, please visit www.ihstrategies.com or call 1.800.327.9335
Who will provide medical care to millions of newly-insured people? When Massachusetts made health insurance mandatory, physician practices were overwhelmed by the increased demand. Many doctors stopped taking new patients, and those who continued to accept new patients saw waiting times for appointments lengthen significantly. Visits to emergency rooms went up 7 percent, adding unanticipated costs to the program. To avoid repeating this pattern nationally, physician practices and hospitals employing physicians must proactively add capacity to treat large numbers of new patients.
Ideally, every new patient will have access to a primary care physician they see on a regular basis to help them maintain good health and to prevent unnecessary emergency room visits. But primary care physicians are already in short supply. The American Academy of Family Physicians predicts a shortfall of 40,000 primary care physicians by 2020. Moreover, the U.S. Bureau of Health Professions projects a shortage of 109,600 physicians in all specialties by 2020. Given the long timeframe required to educate new physicians, it seems certain that mid-level providers — physician assistants, nurse practitioners, and others — will be needed to fill the gap.
Where are mid-level providers practicing today?
Today, roughly 80,000 NPs and 30,000 PAs work in a variety of settings around the country. They have traditionally provided care in rural and underserved settings, where they work under the supervision of a physician who may or may not be located in the same office or community. In these settings, mid-level providers diagnose and treat a broad range of routine medical conditions, referring the more complicated cases to the supervising physician. In our modern healthcare marketplace, clinics located in pharmacies and other retail locations are often staffed with mid-level providers serving in this traditional role.
Over the last 30 years, roles of mid-level providers have expanded well beyond the primary care environment. Today, mid-level providers work in hospitals, emergency departments, inpatient and outpatient surgical facilities and in specialty practices such as cardiology and oncology, as part of the team that serves patients receiving ongoing treatment. It is often a mid-level provider who monitors fragile diabetics, sees cancer patients between treatments, sets bones in the ED or closes for the doctor after surgery.
How are mid-level providers paid?
IHStrategies’ proprietary compensation database shows that mid-level providers are nearly always paid a base salary based on years of experience, with shift differentials, overtime pay, and additional payments for taking call. Less than half of organizations in our database report using incentive plans that reward individual or team performance. Mid-level providers participate in standard, all-employee benefit plans and receive additional continuing medical education benefits — some combination of tuition reimbursement, paid time off for exams, expenses for attending medical conferences, professional dues and subscriptions and reimbursement of exam or licensure fees.
At the national level, NPs, PAs, and nurse midwives are paid fairly comparably, as shown in the table below.
TOTAL ANNUAL CASH COMPENSATION
| 25th Percentile | 50th Percentile | 75th Percentile | |
| Nurse practitioners |
$79,900 |
$91,500 |
$105,900 |
| Physician assistants |
$77,300 | $88,600 | $102,200 |
| Nurse midwives |
$83,700 |
$92,400 |
$103,300 |
IHStrategies has found that NPs and PAs in surgical and other select medical sub-specialties are paid 5 percent to 15 percent more than their primary care counterparts. Even so, salaries for mid-level providers are lower than those of physicians. This suggests that mid-level providers may represent an option for increasing the capacity of physician specialty practices without greatly increasing payroll costs.
Unlike physicians, most mid-level providers do not have incentive plans based on productivity today. But as the contributions of mid-level providers grow in importance to physician practices, we expect productivity-based compensation plans for this group to become more commonplace.
Changing Roles of Mid-Level Providers
There is no question that hospitals and physician practices will need to change the way they deliver care as the healthcare environment continues to evolve. The aging of our population, looming shortages of physicians and nurses, and increasing access to health insurance all point to needing to care for more patients with fewer providers. According to the American Hospital Association, hospitals will need to redesign work processes and introduce new technologies to increase efficiency, effectiveness and employee satisfaction; retain existing workers, including those able to retire; and attract a new generation of workers if they are going to have an adequate workforce in the coming years. Physician practices will face the same challenges.
The introduction of accountable care organizations and the anticipated shift in reimbursement from fee-for-service to payments for episodes of care will demand greater efficiency and a renewed emphasis on outcomes. The concept of the “medical home” will require a team approach and greater coordination between health professionals who deliver care in a seamless manner.
There are compelling reasons to consider expanding the roles of NPs and PAs in both hospitals and physician practices. The timeframe for educating mid-level providers is much shorter than the timeframe for educating physicians, making it easier to increase their presence in the workplace quickly. Organizations can recruit mid-level providers directly from the medical schools and nursing schools that train them, or can identify good candidates from their own staffs and offer them the additional training they need to step into the role.
Mid-level providers are cost-effective in primary care settings, where they can relieve physicians of the necessity of providing routine care. This approach enriches the work experience for physicians, enhancing retention. Mid-level providers are also cost-effective in specialty practice settings, providing much of the medical care patients need while allowing physicians to focus more attention on the complex issues that make the best use of their knowledge and experience.
Including NPs and PAs on the clinical staff can enhance scheduling flexibility and make it easier to offer part-time jobs without compromising quality of care. This may help attract and retain physicians beyond normal retirement age and women physicians who are reluctant to commit to full-time schedules.
As NPs and PAs take on expanded roles similar to those of physicians, we expect incentive plans to become a standard component of pay, although awards will be more modest in size than those of physicians. Like physicians, we expect mid-level providers to receive incentive awards for productivity, patient satisfaction, adherence to quality standards and achievement of other organizational goals. The design of compensation programs for mid-level providers will also influence the design of programs for the physicians who supervise them.
Looking Ahead
In the near future, the medical community will be expected to serve more patients with fewer physicians. This reality will require a redesign in the way medical care is delivered, and mid-level providers will likely play a bigger role than they do today. As your organization plans for these changes, consider these questions:
• Where will your organization get enough providers to see an influx of new patients?
• Will mid-level providers be part of the solution to physician shortages in your organization?
• What strategies will you adopt to recruit and retain the mid-level providers you need?
• How will your compensation package for mid-level providers help your organization stand out in a tight labor market?
• If you think of NPs and PAs as part of your physician staff, instead of your nursing staff, should you pay them differently than you do today? Should you add incentive pay or other benefits?
• How will your organization compensate physicians for supervising mid-level providers?
• What is the appropriate relationship between physician pay and mid-level provider pay?
The way your hospital or health system answers these questions may determine how successful you are in meeting the demands of a new healthcare marketplace.
Integrated Healthcare Strategies provides not-for-profit healthcare organizations with direct access to a comprehensive array of healthcare-specific services, delivered by professionals from the industry who understand the rigors of running a healthcare organization – from the lunchroom to the Board Room. Integrated Healthcare Strategies specializes in the areas of physician strategy and compensation, employee compensation, executive compensation, human capital solutions, labor relations, leadership transition planning, executive search, employee surveys, performance management and board governance solutions. For more information, please visit www.ihstrategies.com or call 1.800.327.9335