Physicians have seen reimbursement fall over the last few years and are looking for additional compensation from hospitals in service line agreements and call coverage contracts as a result, according to the VMG Health 2023 Physician Alignment: Tips and Trends Report.
In the last year, pay for medical care specialties increased at 2.5 percent while surgical specialty compensation grew 0.7 percent year over year, according to a Medical Group Management Association report, which hasn't kept up with inflation. Primary care providers reported a 4 percent pay increase in the last year, aligned with an overall increase in productivity as measured by work relative value units. Surgical specialist wRVUs remained flat year over year.
There are other considerations at play too. More care is headed to the outpatient setting, which typically receives lower reimbursement than the inpatient setting, and the cost of care continues to increase. Hospitals are facing tight margins and feeling pressure to invest in technology and transition to value-based care initiatives.
"The relationship between doctors and the hospital is extremely dynamic," Adam Bitterman, DO, chair of Huntington (N.Y.) Hospital's department of orthopedic surgery, told Becker's in a recent article about the changing relationship between physicians and hospitals. He added, "Doctors must continue to collaborate with hospitals in order to provide care for the sickest patients while those physicians in the outpatient setting facilitate efficiency and maintain the highest levels of quality care. Cost of care will continue to be an important discussion point for all physicians across the healthcare continuum, whether inpatient or ambulatory."
The changing healthcare marketplace has brought together hospitals and independent physician groups that previously may have had a contentious relationship. The common goal is providing access to great care, but aligning around the best way to achieve that goal is often easier said than done. Jeff Carstens, MD, service line medical director and cardiologist at West Des Moines, Iowa-based UnityPoint Health, said the physician-hospital relationship is always evolving. He works with employed and independent physicians, including some physicians in private equity-backed physician groups.
"We strive to maintain a strong focus on patient outcomes as well as continue to grow our programs," Dr. Carstens told Becker's. "There is certainly some tensions in markets where ASCs are developing, but I think coming back to what is best for patients helps to drive decision-making on both sides and helps to maintain provider engagement. This has led to the opportunity to grow our inpatient census as well as procedure volumes in our markets."
While physicians and surgeons may seek a pay increase for service line agreements and call coverage, especially as competition for specialty care heats up, VMG Health noted compensation models must consider fair market value for services rendered.
The compensation models can take the following elements into consideration:
1. Time required to fulfill responsibilities, including onsite, offsite and on-call time, as well as administrative services.
2. Expertise needed to fulfill the contract, considering whether a physician is needed or an advanced practice provider could perform related duties.
3. Outcomes-based quality metrics that reflect the physician's performance, with financial incentives tied to reaching higher quality metrics than is currently achieved.
4. Administrative costs, including billing and office support expenses.
"To identify successful opportunities for physician alignment, understanding trends in service line strategy and considering regulatory guided reimbursement challenges are critical," the report noted. "As we move into 2024, VMG Health believes the focus on single-specialty, adoption of telehealth, and the initiatives around behavioral health and value-based care will be game-changing strategies."