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Benchmarking Call Coverage for a Better Bottom Line

 |  By kminich-pourshadi@healthleadersmedia.com  
   July 18, 2011

Call coverage is a necessity at every hospital, but if it isn't calculated properly (and recalculated frequently) it can quietly bleed your budget. So how can you get your call coverage costs under control? Simply, you must benchmark them.

I've written more than my share of articles on RVUs, incentive compensation, and benchmarking. What has held true over the years, is that some calculations are harder than others and call coverage is on the list of challenging areas. At the recent Health Care Financial Management Association meeting in Orlando, I asked numerous financial leaders what their compensation planning pain points were and the answer was invariably one of two topics:

1. How to create a compensation plan for the new health care models (which I'll save for another column).

2. How to get call coverage "right" – which generally means "pay less, but stay market-competitive and encourage physicians to participate."

Perhaps what makes this area so difficult and irksome for financial leaders is that for many years call coverage was an unpaid expectation placed on physicians, but today doctors want to be paid, and increasingly, hospitals are doing so.

According to MGMA's Medical Directorship and On-Call Compensation Survey Report, nearly two-thirds of providers in hospital-owned group practices report some compensation for on-call duties, either via an hourly rate or through a stipend (hourly, weekly, monthly, or annually.

So, how do you arrive at what to actually pay these physicians? Naturally, it varies depending on specialty and region and in some instances supply and demand.

The Basics

Getting a handle on your call coverage means you must benchmark against your local and regional competitors, and if you're a large system, you should do a national benchmark too. Benchmarking takes time, which is why it isn't done nearly as frequently as it should be, so if you are scratching your head over when you last looked at your call compensation, it's been too long and it's time to do it again.

There are numerous compensation surveys to turn to. The rule of thumb is that you should use a minimum of two, but more may be better. Start by looking at the large industry compensation surveys, such as AMGA (which has a call coverage survey as well as a larger compensation survey), MGMA, and Sullivan Cotter. These three, well-known benchmark surveys are useful tools, however, keep in mind the data is compiled approximately a year before publication, so the numbers may be a little stale.

Once you cull a call coverage average from these surveys, review a couple of pulse-point surveys. This data is compiled and released quickly (usually within six months of the surveys) and can help gauge the current compensation scene.

For instance, Cejka Search offers one of these surveys as does MD Ranger, Inc. Taking an average from both surveys should offer a near-accurate call coverage compensation rate for your market.

These pulse-point surveys can also offer timely insights to guide your assessment. For example, in MD Ranger's most recent survey, comments on call coverage included these nuggets:

  • Regional location of a hospital had no effect on the rates paid for call coverage.
  • Hospitals paid the highest rates for on-call coverage for trauma surgery, at a median rate of $2,379 per day, and lowest for psychiatry, at $161 per day.
  • Trauma status has the strongest correlation to on-call payment rates. Across all services, trauma status meant an average 26% premium to coverage rates. That's a trend mirrored in California state data that shows non-trauma hospital-physician costs increased at a faster rate than trauma hospital costs between 2008 and 2009.
  • Multi-campus arrangements reduced the average payment per campus by approximately 55%.
Areas to Watch

Naturally, getting your call coverage in order doesn't end with arriving at a benchmark number. That's your starting point. As you go through the process of setting a compensation figure for physician services, there are some key areas to keep an eye on. Penny Stroud, CEO for MD Ranger offered her thoughts: .

  1. Know what's reasonable: Stroud says not understanding what "reasonable" call coverage pay is can be a problem for some hospitals and health systems. "Most valuation consultants consider payments between the 25th percentile and 75th percentile to be reasonable, although paying in the 75th percentile is being very generous, she says.

  2. Understand exceptional circumstances: Getting and keeping a star physician may require financial leaders to occasionally go above the 75th [percentile] — which occurs in rural areas, she says. In those instances, you must use document the rationale and include the benchmark as part of your hiring policy and in the development of your contacts.

  1. "Then you can go beyond the 75th and up to the 90th with 'special consideration'. But you have to be able to document unusual circumstances, such as a shortage of physicians in the area or particularly burdensome call coverage with only a few physicians [participating]," she explains.

    Even with this documentation, however, Stroud cautions that if a hospital or health system needs to go above the 90th percentile, "It's safer to get an outside opinion."

  2. Watch Stark and FMV Restrictions: "You always have to consider fair market value and Stark," Stroud says. As part of watching how much you are compensating physicians for their call coverage you should review the Stark and FMV regulations.
  1. Routinely Benchmark. Stroud says healthcare financial leaders should conduct frequent benchmarks. "They should be doing a benchmark every time they sign a contract [with a physician]," she notes. "It will offer them a guidepost … and it can help them manage the expectations of the physician."

Without question, call coverage compensation is tricky. Ensuring that participating in this vital service is in your physician contracts and paying fair (yet non-exorbitant) wages is are two ways to make this usual financial migraine more of a dull headache.  

Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media.
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