Pediatric physician compensation increased for the 10th straight year, according to survey results from ECG’s 2018 Pediatric Subspecialty Physician Compensation Survey. Pediatric physicians saw a 2.3% gain in 2018. The survey also found that overall levels of work relative value unit (WRVU) production, a major production component of compensation plans, decreased by 3.0%, the fourth decrease in production in five years.
Now in its 12th year, the Pediatric Subspecialty Physician Compensation Survey provides market-specific physician and advanced practice provider (APP) compensation, production, compensation plan design, recruiting, benefits, and operations data. This year’s data showed the largest issues motivating organizations to examine or reconfigure compensation arrangements are the following:
- Growing investment in providers
- Changing reimbursement
- Changing care models
We will unpack these trends in the next sections.
Growing Investment in Providers
“Growing compensation coupled with relatively flat or decreasing revenues indicates that overall investment in pediatric clinical practice continues,” said principal Ken Roorda, a member of ECG’s Children’s Healthcare practice. “This has the potential to create funding problems, and many organizations are working to address this concern by optimizing clinical practice operations, introducing and refining incentive-based compensation plans, and reexamining entire organizational models. These changes are meant to better align physician practice with children’s hospitals’ goals of high quality, efficient use of resources, and better access.” The resulting compensation plans and incentives are more likely to emphasize organizational objectives than ever before.
Many pediatric organizations are implementing nonproduction-based measures in provider compensation plans, anticipating a transition to value-based reimbursement. In response to the anticipated shift to value, pediatric provider organizations have placed physician compensation at the forefront of their strategic and operational initiatives. The alignment of organizational goals in a value-based environment with physician compensation incentives has resulted in compensation structures that are increasingly more likely to incorporate measures of quality and patient satisfaction.
Organizations utilize a variety of indicators in incentive compensation plans, with the most common measure remaining WRVUs (used by 68% of organizations). Across all physicians, 14.3% of total compensation is derived from WRVU production. However, the shift to more nonproduction metrics is clear: of the survey organizations, 50% report using a quality metric in their compensation plans, 32% use a patient satisfaction metric, and 45% use some other nonproduction-based measure. In aggregate, the percentage of total compensation tied to clinical quality, other quality, patient satisfaction, and other nonproduction metrics is 8.4%.
Survey organizations are also including a larger variable component in provider compensation. Since ECG began tracking this metric (in 2012), variable compensation has continued to increase, and in 2018 it represented 34.1% of total cash compensation across all types of physicians, compared to 28.9% in the prior year.
Changing Care Models
Another factor affecting compensation and production levels is the increasing number and broadening role of APPs. In response to long wait times for appointments and shortages in key subspecialty areas, many children’s programs have pursued employment of APPs and adapted care models to allow for both APPs and their physician counterparts to work at peak licensure. Migration of care to the ambulatory setting and ongoing specialization of practice are also key factors. As APPs take on roles traditionally performed by physicians, organizational dynamics around productivity, effectiveness, and compensation are impacted. Collectively, these changes in care models are driving pediatric organizations to evaluate compensation levels and incentive mechanisms. Current hot topic examples include the aforementioned nonproduction incentives, organization-wide goals, and introduction of team-based incentive metrics. A significant challenge is the uniqueness of each organization: the roles of physicians versus APPs, cohort of each, clinical expertise, and nonphysician support. As care models continue to change, the underlying compensation model in pediatric organizations will need to flexibly adapt in order to ensure appropriate compensation for all providers.