Insights from Ludi

To remain competitive and serve their core mission of patient care, hospitals must continually find ways to cut costs and increase revenue.

Opportunities to reduce costs on physician payments for administrative duties are usually overlooked because of legacy operational processes in place. Hospitals contract with physicians to serve as medical directors for strategic service lines, shift work or on-call work, research grants, and teaching programs for graduate medical residents. Most often, savings are readily available with stricter adherence to contracted duties and payment terms through software that automates these processes.

Paying a physician for administrative time is easy, right? You write a contract, the doctor turns in a time log, someone signs off on it and a check gets sent out. Easy, right?

In the words of the great Cher Horowitz, “As if!” (Clueless, 1995)

I (among other things) read contracts for a living and figured something out long ago: physician contracts are rarely written by the people who need to administer them. If they were, they’d make sense and be easy to use. Instead, they’re written to be legal, compliant, cost effective and to help with physician alignment. This leads to physician compensation plans that are difficult to administer.

The regulatory environment dictates that hospitals who contract with physicians meet specific conditions in order for the contract to be legal. The conditions are meant to ensure the physician payment is not based on volume or value of business because it can lead to overusing services and increasing overall costs of care. Technically violating your own contracts can lead to multi-million dollar settlements.

Two weeks ago, our friends at MD Ranger announced publication of 275 physician compensation benchmarks for call coverage, medical direction, administrative services, leadership services, hospital-based services, clinical professional rates, telemedicine, and diagnostic testing rates. MD Ranger is used in over 325 facilities across the US, including large non-for-profit health systems, urban trauma centers, and rural critical access facilities. MD Ranger helps healthcare organizations determine physician contract rates and document fair market value through its web-based platform. Ludi has partnered with MD Ranger for a number of years as our expertise and products work well together. Today, we wanted to share insights from MD Ranger’s 2017 reports with you.