Designing a Faculty Compensation Plan to Meet Today s Challenges Brian T. Smith Braden Mantei Rush University Medical Center October 12, 2015 Learning Objectives Evaluate alternative faculty compensation models in place of a more traditional fee-for-service approach Identify key indicators to properly target physician productivity and success drivers for enhancing organizational growth, access and financial metrics Recognize the legal and operational requirements impacting physician compensation 2 Overview 1. About Rush University Medical Center 2. Compensation and Incentive Model History 3. Compensation and Incentive Model Transition 4. Challenges & Lessons Learned 3 1
Mission, Vision and Values MISSION: The mission of Rush is to provide the best health care for the individuals and diverse communities we serve through the integration of outstanding patient care, education, research, and community partnerships. VISION: Rush will be the leading academic health system in the region and nationally recognized for transforming health care. VALUES: Innovation Collaboration Accountability Respect Excellence 4 Chicago Marketplace 5 Academic Medical Centers 3 Major Health Systems Primarily Discount Fee-For-Service BCBS-IL Dominated 5 Structure Rush University Medical Center is a 664-bed academic medical center with a single organizational structure that encompasses Rush University Hospital, Rush University Medical Group, and Rush University. Rush University Medical Center Clinical Affairs University Affairs Rush Corporate Hospitals University Medical Research Group Rush University 6 2
Rush University Medical Group (RUMG) Rush University Medical Group 504 Physicians 60% of Rush Medical College faculty 85% specialty; 15% PCP 150 Advanced Practice Providers Physician Assistant Nurse Practitioners 600 Staff Members Nurses, Medical Assistants, Administrative Assistants, and Revenue Cycle Management Team 18 Clinical Departments 7 COMPENSATION AND INCENTIVE MODEL HISTORY 8 Foundation Transparent environment in which Rush Medical College faculty are eligible for: Academic Promotion Compensation commensurate with the quality, quantity, and kind of work performed Opportunity to obtain national recognition in their areas of expertise. First and foremost, a faculty member s compensation would be aligned with the value that the faculty member provides to Rush. 9 3
Guiding Principles 1. Be consistent with and support the mission of the institution. 2. Enhance ability to recruit and retain excellent faculty. 3. Maintain and enhance professional environment conducive to faculty success. 4. Transparency between compensation and 1) rank and tenure, along with 2) the productivity and contributions made to the mission of Rush. 5. Ensure compensation methodology is fiscally sound. 6. Timely review and approval of faculty compensation. 7. Compliance with all legal and regulatory requirements. 8. Accountability by faculty and Rush administration for faculty to be successful. 10 Pre FY2006 Faculty compensation and recruitment principally driven by Department Chairpersons Recruitment Not necessarily aligned with missions or strategies Faculty would arrive without consideration for state licensing, insurance, credentialing, and proper announcements Faculty recruitments occurred without consideration for facility planning or return on investment Compensation Determined by Chairperson Inconsistent application of market compensation Internal inequities not often considered Efforts and sources of funding were not aligned Goals were not clearly articulated 11 FY2006 FY2008 Development and communication of clear compensation principles for faculty retention and recruitment Recruitment Created strategic plans for RUMG, Research, and Rush University, aligned with the board approved Rush strategic plan Established institution-wide Faculty Recruitment Committee Created return on investment corporate reports for faculty recruitments Compensation Clinical Single contract with a common pay master Created Physician Compensation Workgroup Administrative Organized efforts around the CARTS model Established clinical productivity targets with the Research UHC / AAMC Faculty Practice Solution Center (FPSC) Enabled by RUMG Revenue Cycle T RMC/T GME Standardization and Epic rollout Utilize AAMC Report on Medical School Faculty Strategic/Special Salaries Sullivan Cotter MSP Effort RUMG Clinical Administration Non-Medical Affairs Effort and Administration Research Effort Research Administration RMC and House Staff Instruction and Administration Sub 5 Contracts 12 4
COMPENSATION AND INCENTIVE MODEL TRANSITION 13 Phase I Chairpersons FY 2009 Implemented Chairperson Compensation and Incentive Model Incentive Opportunity 15% of Total Base Salary Minimum Requirement Meet/Exceed Fiscal Year Outpatient Visit (Clinical Chairpersons) or Fiscal Budget Targets (Basic Science Chairpersons) Goals Blend of Corporate (5%) and Department-Based (10%) No base salary increases for Chairpersons Faculty Merit Increases for Rush Medical College faculty Example Dr. Smith Department Chairperson % of Base Minimum Eligibility Requirement The Department must meet their FY2009 Budgeted Outpatient Visit target of 20,000. Goal 1 Rush Corporate Goals 5% Goal 2 Meet Departmental Budget Targets 5% Goal 3 Complete and Sign Strategic Recruitment 5% 14 Phase II Rush Medical College Faculty Major effort to understand faculty activities to better align with CARTS model Implemented XYZ Model compensation framework to better align effort FY 2010 & FY 2011 Implemented incentive model across all faculty missions FY 2010 Incentive Opportunity 5% of Clinical Base Salary FY 2011 Incentive Opportunity 10% of Total Base Salary Clinical productivity and bonus determined by wrvuproductivity Mean Productivity 5% Clinical Base Salary 75 th Percentile Productivity 10% Clinical Base Salary Prorated if productivity between Mean and 75 th Percentiles Bonus calculation directly communicated to eligible faculty Department Chairpersons recommended administrative, research, and teaching goals Targeted base salary increases for Rush Medical College faculty 15 5
Effort Allocation and Compensation Model Mission-Based Salary X Faculty Membership + Mission-Based Allocation Clinical Y + + Incentive(s) Clinical Z Bonus Potential Citizenship Administration Research Administration Research T RMC /T GME T RMC /T GME Strategic/Special 16 Clinical Incentive Plan Reports Contracts - Salary, Effort, wrvu Benchmark and Target Actual wrvus FY11 Actual A B C D E F G H I J K L M N O P Q R S Physicians Section Total Effort Total Salary Clinical Effort Clinical Salary Annual wrvu Baseline Tier 1 Target (5% Bonus) Tier 2 Target (7.5% Bonus) Tier 3 Target (10% Bonus) PHYSICIAN A (Blank) 1.00 140,000 0.75 105,000 1,000 1,500 2,000 2,001 200 - - - 800 No Bonus 0.00% - 10,500 PHYSICIAN B (Blank) 1.00 140,000 0.75 105,000 1,000 1,500 2,000 2,001 300 - - - 1,200 Meet Baseline 20.00% 2,100 10,500 PHYSICIAN C (Blank) 1.00 140,000 0.75 105,000 1,600 1,500 2,000 2,001 425 - - - 1,700 Meet Tier 1 60.00% 6,300 10,500 PHYSICIAN D (Blank) 1.00 140,000 0.75 105,000 1,600 1,500 2,000 2,001 525 - - - 2,100 Meet Tier 3 100.00% 10,500 10,500 PHYSICIAN E (Blank) 1.00 140,000 0.75 105,000 2,000 N/A 2,000 2,400 550 - - - 2,200 Meet Tier 2 (A) 87.50% 9,188 10,500 PHYSICIAN F (Blank) 1.00 140,000 0.75 105,000 2,000 N/A 2,000 2,400 700 - - - 2,800 Meet Tier 3 100.00% 10,500 10,500 July - Sept FY11 Q1 Actual Oct - Dec FY11 Q2 Actual Jan - Mar FY11 Q3 Actual Apr - June FY11 Q4 Actual Annualized FY11 wrvu Production Quarterly Report Highlights: Faculty Contracted Efforts and Salary Bonus Level Bonus Percentage Expected Bonus Potential Bonus Column Title Definition A-F - Given, Per Faculty Effort Allocation and Compensation Agreement Physicians < 75th Percentile - 4 Qrts; FY10 new hire 3 Qrts Annualized; FY11 new hire Pro Forma wrvu target G Annual wrvu Baseline Physicians > 75th Percentile - 75th Percentile Benchmark H Tier 1 Target (5% Bonus) Physicians < 75th Percentile - Mean Benchmark; Physicians > 75th Percentile - Not Applicable I Tier 2 Target (7.5% Bonus) Physicians < 75th Percentile - 75th Percentile; Physicians > 75th Percentile - 75th Percentile J Tier 3 Target (10% Bonus) Physicians < 75th Percentile - Exceed 75th; Physicians > 75th Percentile - 4 Qrts; FY10 new hire 3 Qrts Annualized K-N Actual wrvus wrvus per Quarter as Reported in FPSC O P Q Annualized wrvu Production Annualized wrvus YTD ((Sum of wrvus per Quarter)/(# of Quarters))*4 Bonus Level Baseline and Tiered Targets Actual wrvu production by Quarter Potential Bonus available and estimate of expected bonus based on annualized wrvu production Meet Baseline = Annual wrvu Projection Exceeds Baseline, but not Tier 1 Target Meet Tier 1 = Annual wrvu Projection Meets or Exceeds Tier 1 Target, but not Tier 2 Target Meet Tier 2 (A) = Annual wrvu Projection Meets or Exceeds Tier 2 Target, but not Tier 3 Target Meet Tier 3 = Annual wrvu Projection Meets or Exceeds Tier 3 Target Meet Baseline = ((Projection - Baseline)/(Tier 1 Target - Baseline))*50% Meet Tier 1 = ((Projection - Tier 1 Target)/(Tier 2 Target - Tier 1 Target))*25% + 50% Bonus Percentage Meet Tier 2 (A) = ((Projection - Tier 2 Target)/(Tier 3 Target - Tier 2 Target))*25% + 75% Meet Tier 3 = Full 100% Bonus 17 R Expected Bonus Bonus Dollars Attained = Bonus Percentage * Potential Bonus S Potential Bonus 10% of Clinical Salary Phase III Linking to Corporate Metrics Similar to Chairpersons, clinical Division and Section Directors must meet/exceed fiscal year outpatient visit target in order to be bonus eligible Implemented minimum base salary coverage requirements in order to be eligible for research bonus opportunity FY 2012 & FY 2013 CMO Office engagement for Administrative goals Focus toward quality outcomes and patient experience Updated Rush Medical College teaching effort calculation In conjunction with redesign of 4-year curriculum Increased clinical incentive opportunity within specific areas 30% Clinical Base Salary GIM, Family Medicine, Gen Peds, General Neurology Held other missions to 10% base salary bonus opportunity Department Chairpersons recommended admin, research, and teaching goals Targeted base salary increases for Rush Medical College faculty 18 6
Bonus Plan Framework (Z) Research Framework (Z R ) Based on meeting predetermined individual goals as defined by the Chairperson and approved by the Dean s Office Minimum base salary coverage from external grant sources must be met in order to be eligible for their research bonus Assistant Professor: 30% Associate Professor: 50% Professor: 70% Faculty with 30% must have 100% research base salary coverage in order to be eligible for their research bonus 19 Bonus Plan Framework (Z) Goal Examples (Z X, Z A, Z T ) Citizenship (Z X ) Examples Chair a Department Committee Completion of Specific Certification(s) Administrative (Z A ) Examples Medical Directors Achieve RUMG outpatient satisfaction target Section Directors Meet fiscal year budget targets for Section Patient Safety Officers Meet departmental quality targets tied to Corporate Dashboards Teaching (Z T ) Examples Teachers Develop or modify existing teaching materials to integrate with i-human cases for the new block curriculum. Block Administrators Overall student course evaluation > 4.0 (out of 5) 20 Clinical Incentive Plan Reports Contracts - Salary, Effort, wrvu Targets Actual wrvus FY13 Actual Employee ID Physicians Total Effort Total Salary Clinical Effort Clinical Salary Tier 1 Target (5% Bonus) Tier 2 Target (10% Bonus) July August September 1 Physician A 1.00 100,000 0.95 95,000 475 950 35 45 48 - - - - - - - - - 512 Meet Tier 1 7.79% 7,400 15,869 2 Physician B 1.00 100,000 0.51 51,000 255 510 25 50 55 - - - - - - - - - 520 Meet Tier 2 10.00% 5,100 24,225 17,564 3 Physician C 1.00 100,000 0.60 60,000 300 600 30 20 20 - - - - - - - - - 280 No Bonus 0.00% - 15,359 4 Physician D 1.00 100,000 0.90 90,000 450 900 20 15 50 - - - - - - - - - 340 No Bonus 0.00% - 15,075 5 Physician E 1.00 100,000 0.50 50,000 250 500 35 45 45 - - - - - - - - - 500 Meet Tier 2 10.00% 5,000 21,850 6 Physician F 1.00 100,000 0.95 95,000 475 950 50 30 30 - - - - - - - - - 440 No Bonus 0.00% - October November December January February March April May June Annualized FY13 wrvu Production Bonus Level Bonus Percentage Expected Bonus Potential Bonus TOTAL 6.00 600,000 4.41 441,000 2,205 4,410 195 205 248 - - - - - - - - - 100,128 - - 17,500 109,941 Sent monthly to Department Chairpersons and Administrators Provides updates for Clinical Incentive Plan Actual & Annualized wrvu data Comparison to benchmark targets (Mean & 75 th Percentiles) Expected Bonus & Potential Bonus Opportunity 21 7
RUMG Dashboard Key RUMG Metrics tracked and reported at the Corporate Level Visits and New Visits compared to budget Outpatient Satisfaction compared to budget Number of providers meeting & exceeding wrvu targets ED visits, hospital admissions, and length of stay included in volume metrics reports Needed a way for clinics to track progress for those and additional growth and access metrics 22 RUMG Dashboard Sent monthly to: Dept. Chairpersons Dept. Administrators Section & Medical Directors Provides updates on key RUMG Metrics: Growth Access Quality 23 Phase IV Link to Value-Based Metrics Targeted base salary adjustments with increased incentive opportunities Implemented new bonus plan for Advanced Practice Providers (APPs) Piloted group clinical incentive plans with APPs Epilepsy; Cardiology; Urology FY 2014 & FY 2015 Piloted group clinical incentive plans with New Patient Visit multiplier Clinical Incentive Plan wrvu productivity with programmatic goals CVT Surgery; Adult Critical Care; Hospital Medicine; Stroke Medicine Clinical Incentive Plan Transition from wrvus to Value-Based Breast Imaging; Transplant Service Line; Palliative Care; Peds & Neurological Critical Care /wrvu modifier for achieving Patient Experience Targets Emergency Medicine; Geriatric Medicine Removed minimum requirements for Chairperson Incentive Plan 24 8
Phase V Future Enhancements FY 2016 & Future Change to minimum requirement for clinical Division and Section Directors to be bonus eligible FY2012-FY2015 Meet/exceed fiscal year outpatient visit target FY2016 Patient encounters are closed according to RUMG Policy All faculty must now close their encounters according to the current RUMG policy in order to be bonus eligible Increased timing of bonus payments during the fiscal year New Funds Flow Methodology Incentive Opportunities Departmental incentives for exceeding fiscal targets Departmental goals for exceeding quality & budget targets /wrvu modifier for achieving specific quality metrics Continued shift from individual to group-centered clinical incentive plans Continued push to link incentive opportunities with academic goals 25 Example Dept Incentives Example: Department A Change in Net Assets Clinical Hosp Admin Research Teaching GME Sub 5 Total Budget 100,000 - (10,000) - 5,000-95,000 Actual 160,000 5,000 (20,000) (10,000) 5,000-140,000 Variance 60,000 5,000 (10,000) (10,000) - - 45,000 Department A s Change in Net Assets after funds flow is 45,000 better than budget during this fiscal year. It would then be able to keep a portion of the difference. 40% (18,000) to the department 60% (27,000) used institutionally for strategic investment and to cover net overall losses by the departments 26 Example Dept Incentives Example: Department A Goal Quality/ Satisfaction Budgeted Volume Metric Patient Satisfaction New Patient Visits FY15 Actual Baseline (FY14 Actual) Baseline Met Target Target Met 92.0 91.0 Yes 91.6 Yes 600 500 Yes 550 Yes Department A exceeded their baseline and target goals and would earn additional funds based on the number of employed clinical departmental faculty, as of June 30: Departmental A Employed Clinical Faculty 15 Dollar Amount per Faculty Member 5,000 Total Funds 75,000 27 9
Example New Recruitment Dr. Bob Stevens Effort Allocations FTE Base Salary Incentive Total Potential Compensation Clinical Activities 0.95 190,000 15,000 205,000 Citizenship 0.05 10,000 10,000 Non-Clinical Incentive 5,000 5,000 Total 20,000 220,000 1.00 200,000 Clinical Bonus Calculation Bonus Non-Clinical Calculation Target Bonus wrvu Target 5,140 Practice Goals Pt Satisfaction 91.6 1,250 /wrvu 50 New Pts w/in 14 Days 75% 1,250 Subtotal 2,500 Total Clinical 15,000 Academic Goals wrvu Bonus Publications 2 1,250 National Committee Position 1 1,250 Subtotal 2,500 Total Non-Clinical Bonus 5,000 wrvu Target Specialty 1.0 Mean Reduction Target Otorhinolaryngology 8,567 0.40 5,140 28 CHALLENGES & LESSONS LEARNED 29 Challenges & Lessons Learned Appropriate CARTS Effort Alignment cfte Definition Identifying champions across the organization, not just in 1-2 departments Setting Appropriate and Standardized Goals Incentive Plan Communication Base Salary vs. Incentive vs. Total Compensation We are Different Departmental structure and organization vs. other benchmarked Academic Medical Centers Local Market Conditions Ancillaries 30 10