Cardiothoracic Surgeon Compensation: Markets, Models and Value

Transcription

1 Cardiothoracic Surgeon Compensation: Markets, Models and Value G. Randall Green, MD, JD, MBA Chief, Division of Cardiac Surgery Co-Director of the Upstate Heart Institute SUNY Upstate Medical University Syracuse, New York

2 2 Disclosures Hancock, Daniel & Johnson, P.C., Director GreenMark Partners, LLC, Member

3 Goals 1. Review current state of the market 2. Employment and compensation models 3. Compensation valuation- FMV 4. New survey system for market valuation

4 The labor market for Cardiothoracic Surgery

5 Cardiothoracic surgeon compensation levels are not simply related to reimbursement. 5 MACRO Reimbursement Consolidation Population Health Micro Finance Clinical need Mission critical Institutional culture

6 Imbalance in the labor market for cardiothoracic surgery remains a strong driver of compensation PGY-1

7 The trend toward greater cardiothoracic surgeon-hospital alignment continues. 7 >76% cardiothoracic surgeons employed in % remain in private practice- down from 54% in the 2010 survey.

8 Transitioning through Co-management or PSA entering late stage. 8 Professional Services Arrangement Co-Management

9 All compensation models uniquely combine common revenue sources. 9 Technical Call coverage Advanced Care Practitioner supervision Academic/Educational/Tesearch Medical Directorships Clinical Co-management/Service Line Management Professional Services

10 Most compensation models attempt to match clinical productivity to compensation. 10 Pure Productivity Guaranteed Base+Productivity Bonus Guaranteed Base+Other Bonus Guaranteed Salary

11 The wrvu- industry measure of clinical productivity and common driver of compensation. 11 Total-RVU = (wrvu x wgpci) + (pervu x pegpci) + (mrvu x mgpci) Geographic Adjustment Factor

12 The Law, FMV and compensation valuation

13 Federal law constrains free market forces establishing levels of physician compensation. 13 Federal Physician Self- Referral Law Anti-kickback Statute False Claims Act Civil Strict liability Criminal Intent Civil/Criminal Employment exception Personal Services safe harbor Stark/AKS basis

14 The regulatory requirements of financial relationships between physicians and hospitals 14 Taken from Stark The amount of the remuneration under the employment is - (i) Consistent with the fair market value of the services; and (ii) not determined in a manner that takes into account (directly or indirectly) the volume or value of any referrals by the referring physician. (3) would be commercially reasonable even if no referrals were made to the employer.

15 FMV and CR are terms of art- their meanings are specific and not intuitive. 15 Stark FMV definition Arms-length negotiations Well informed parties not in a position to generate business for the other party At the time of the agreement Based upon comparable arrangements FMV must contain evidence that the compensation is comparable to what is ordinarily paid for that service in the location at issue

16 FMV and CR are terms of art- their meanings are specific and not intuitive. 16 Would this particular arrangement make commercial sense in the absence of referrals? Based upon the specific terms and conditions of the subject arrangement Assesses the overall arrangement including qualitative elements- not just the finances as in FMV Strategy Operations Commercial Reasonableness analysis goes beyond FMV FMV is just one component of CR

17 Valuation consultants calculate value of professional services using three methods. 17 Cost Income Market

18 CMS supports the use of survey data for FMV analysis. 18 Stark, Phase III : reference to multiple, objective, independently published salary surveys remains a prudent practice for evaluating fair market value 72 F.R

19 The Market method using survey data dominates FMV practice. 19 Survey Says? 1. How many wrvus last year? 2. What wrvu percentile is that? 3. Find TC for that percentile (LI) 4. Find wrvu rate for that percentile (CRM) 5. Pick from 4 or 5 to suit needs 3 2 4

20 Regulatory compliance case law- where the rubber meets the road for FMV and CR United States ex rel. Drakeford v. Tuomey Healthcare System (2014)- $237M - Hospital compliance officer (relator) - Stark/FCA- physician compensation 20 United States ex rel. Baklid-Kunz v. Halifax Med. Center, et al (2014)- $85M - Michael Drakeford, MD (relator) - Stark/FCA- physician compensation in excess of FMV United States ex rel. Parikh v. Citizens Med. Ctr. (2015)- $21.75M - Three former employed cardiologists - Stark/FCA - Used survey median as FMV; salaries were still below national median

21 The Review problem: improper use of survey data

22 Correlation between Compensation and wrvu production for Cardiovascular Surgery over 9 years: R-squared (mean)

23 23 Exhibit 12 and 13 pg Correlation between Compensation and Professional Collections for Cardiovascular Surgery over 9 years:

24 24 Exhibit 10, p. 561 Total compensation is highly variable at all levels of productivity- Interquartile Production Data

25 25 Exhibit 11, p. 562 Total compensation is highly variable at all levels of productivity- Interquartile Production Data

26 Physician Productivity and Compensation survey data are not representative of the marketplace 26 Not random and Underpowered

27 Physician Productivity and Compensation survey data are not statistically valid for inference 27 Descriptiv e Statistics Inferential Statistics

28 Valuation requires local market analysis, yet surveys report National and Regional data. REGIONAL 28

29 The Review solution: better market data

30 US Income distribution (2014) 30

31 Physician productivity and compensation data collection and analysis produce an inaccurate standard. 31

32 Could a new survey system improve data collection and information analysis for inferential use? 32 Not random but High participation

33 Superior information serves both ends of the compensation curve. 33 OFFENSIVE Accurate compensation valuation DEFENSIVE Compliance Protection

34 with powerful analytics, immediately available. 34 STEP 1 STEP 2 STEP 3 Invitation and Verification Data Collection Data Visualization

35 35 Step 1: Invitation and Verification USERNAM EPASSWO RD

36 Sttep2: Survey data collection and database storage 36 Printable Pdf 1. Red Question 2. Green Question 3. Green Question 4. Red Question 5. Green Question

37 37 Step 3: Data visualization software Describe program and how it works Design appropriate cohort groups for comparison Low cost feature (revenue model)

38 38 The future of GMP system Improve inferential power of non-random sample Improve information comparability - GPCI - Regional/local economic indicators - Regional price parity, COL index, Wage index Potential to collect and report hospital financial data Security - Blockchain- DLT Data validation Data Integrity

39 39 THANKS! G. Randall Green, MD, JD