A Better Way to Pay Hospitalists

There are some interesting—but hardly surprising—findings in a report from the Medical Group Management Association and the Society of Hospital Medicine that show that base salary impacts both productivity and overall compensation for hospitalists.

According to the study, State of Hospital Medicine: 2010 Report Based on 2009 Data, hospitalists who receive a lower proportion of total compensation paid as base salary tend to be high producers who are incentivized to earn more.

The report—which contains information on 443 hospital medicine groups and 4,211 hospitalists—found that hospitalists who received 50% or less of their compensation as fixed base salary reported the highest median work relative value units (wRVUs) at 5,407. Hospitalists who received 51% to 70% of their compensation as base salary performed 4,591 wRVUs, compared to 3,859 wRVUs for hospitalists who received 71% to 90% of their compensation as base salary. Hospitalists who received 91% to 100% of their compensation as base salary reported 3,571 wRVUs.

In plain English, the report shows that the more a hospitalist receives in base pay as a percentage of overall compensation, the less incentivized he/she is to add to his/her workload. Of course! They have nothing to gain monetarily by improving productivity. If anything, they are disincentivized—as any employee would be—to do more work for the same money.

Though the study is new, the findings are hardly a revelation. Actually, the findings are a hard data affirmation that medicine is a business as much as it is a healing mission. The idea of paying more money for more and better work is bigger than hospitalists, and hospitals, and the entire healthcare system. It's human nature, and it's good old incentive-laced capitalism.

Hospitalists are among the fastest growing specialties, and a growing number of them are directly employed by hospitals. With that trend in mind, MGMA/SHM say more hospitals are catching on to this dynamic and moving away from straight base compensation and towards base salary and incentive packages that emphasize productivity and quality.

"This new data will prove tremendously helpful to hospitalists and healthcare executives alike," said William Landis, MD, chair of SHM's practice analysis committee. "While it is important to keep in mind that wRVUs cannot measure every work effort, this survey data will definitely support better decisions about how hospitalist practices are resourced, and it will ultimately promote delivering the best possible care to hospitalized patients across the country."

A further breakdown of the data showed that median wRVUs were higher for physicians in practices that were not hospital-owned than for physicians in hospital-owned practices. Physicians working in practices that provide on-call coverage at night generated more wRVUs than physicians working in practices that provide on-site care at night.

Internal medicine hospitalists reported median compensation of $215,000. Family practice hospitalists received $218,066 and pediatric hospitalists reported compensation of $160,038. Compensation varied based on geography, practice teaching status, and practice size.