Client
Confidential Health SystemLocation
MidwestECG partnered with one of the largest health systems in the Midwest to redesign its physician compensation strategy, processes and procedures for compensation administration, and the way physicians are contracted for services.
The Midwest health system comprised almost 12,000 employed and affiliated providers, 20-plus hospital locations, more than 300 ambulatory sites, and nearly $15 billion in annual net revenues. The organization was experiencing significant issues with physician satisfaction and retention, operational inefficiencies, and compliance concerns, all related to the structure and execution of its financial arrangements.
The Challenge
The major cause of physician dissatisfaction stemmed from inefficiencies in processes that, on the surface, should have been straightforward. Physicians had to wait 6 to 14 months to receive their productivity incentives. Lack of timely productivity-based salary adjustments had resulted in the health system being out of compliance with contracts and compensation plans. The absence of a standardized contracting process and compensation plans led to ad hoc arrangements being used to address physician relations, caused disruptions in business planning, hampered physician recruitment efforts, and reduced nonclinical staff productivity.
A band-aid solution approach only compounded these issues over time and increased the utilization of contingent or locums hiring, which presented financial challenges. Additionally, the abundance of administrative, research, teaching, and strategic (ARTS) roles intensified the challenges faced by the health system.
Our Solution
ECG was engaged to rapidly address the compensation and contracting issues. ECG assessed current-state plans and workflows and developed a comprehensive set of recommendations in four key areas of operations.
Physician Contracting Operations
- Introduced guidelines for contract reviews
- Reconfigured overall contracting process to streamline activities
- Restructured business planning workflows prior to contract initiation
Physician Compensation Administration Operations
- Integrated the compensation administration team with the finance department
- Optimized workbook templates to introduce consistency in calculations and reduce administrative reviews
FMV Assessment Operations
- Developed “batch FMV” testing for the productivity-based salary adjustment process, productivity incentives, and group compensation plans
- Refined the internal FMV guidelines to reduce the number of arrangements sent unnecessarily for external review
- Configured an internal FMV assessment tool and policy
Physician Compensation Planning Operations
- Evaluated current compensation methodologies and principles
- Collaborated with leadership on best practices for clinical and nonclinical compensation
Our Results
Physician Contracting Operations
- Reduced the number of physician contracts in progress from 1,600 to 300
- Reduced the average time for a contract to process from 80 days to 50 days
- Defined front- and back-end activities of processing contracts for necessary business planning
Physician Compensation Administration Operations
- Decreased the incentive payout time frame by 50% to 60% for approximately 600 physicians who are paid a sum of $40 million
- Performed timely productivity-based salary adjustments and contract amendments for 350 physicians across 60 specialties to ensure compliance with contracts and compensation plans
FMV Assessment Operations
- Significantly reduced the number of arrangements sent to external valuators
Physician Compensation Planning Operations
- Standardized administrative roles, resulting in annual savings of $6 million
- Simplified specialty-specific compensation plans to create equity and alignment with market benchmarks and across the system
