Latest / Becker’s Healthcare Podcast / Provider Compensation Challenges and Strategies

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Provider Compensation Challenges and Strategies · Becker’s Healthcare Podcast

0:00
Hello, and welcome to the Becker's Healthcare podcast
0:02
series. My name is Chanel Banger. And today,
0:04
we're gonna talk about provider compensation challenges and
0:06
strategies.
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Joining me for today's discussion is Jared Steele,
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Managing Principal at Simplify. Jared, thank you so
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much for joining me today. Thanks for having
0:14
me. Perfect. Well, to get us started out,
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can you please share a bit about yourself
0:18
and your work in health care? Sure. Thank
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you. Yep. So I came up through, health
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care finance, health care administration,
0:25
studied business as an undergrad, and then spent
0:28
a had a couple stops as a finance
0:31
analyst for different health systems. University of Utah
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is where I I really started. And then,
0:36
ultimately studied health informatics in graduate school, and
0:40
that really gave me a nice
0:41
rounded view of both the flow of
0:45
processes and data
0:47
and, you know, really contracts
0:49
through the health enterprise.
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So from there,
0:53
I went into consulting, and I spent the
0:56
better part of a decade with ECG management
0:58
consultants. And,
1:00
you know, I joined the firm
1:03
excited
1:04
to do business strategy and process improvement and,
1:07
you know, all all of those kind of,
1:10
standard business projects that come into place. And
1:13
I pretty quickly was put onto projects in
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provider compensation. And
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when you hear that, you're like, what what
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does that even mean? What am I working
1:20
on? Like, I wanna do, you know, ED
1:22
optimization
1:23
or or other, you know, process projects. But,
1:27
the firm,
1:28
does a lot of work with provider comp
1:30
and,
1:31
provider services, and so there was a lot
1:33
of work there. So I started to do
1:35
a lot of projects in that space. And
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you learn very quickly that,
1:39
managing provider compensation
1:41
is a
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very, you know, sophisticated and and challenging part
1:45
of health care finance. And so really grew
1:48
up there and really learned the medical group
1:51
side of,
1:53
health care,
1:54
finances, and funds flow.
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And while I was there, we were doing
1:58
a lot of strategy work, compensation redesign, and
2:01
things like that. But towards the latter half
2:03
of my time in consulting,
2:05
we started to see organizations were just having
2:07
a lot of challenges
2:09
just administering the contract. So, you know, we'd
2:12
figure out the strategy of the contract and
2:14
how we should pay our doctors, and then
2:16
we would, you know, as advisers, we would
2:18
leave that with the medical group to actually
2:21
administer them and calculate the bonuses and all
2:23
of the compensation.
2:25
And we found that that was becoming a
2:26
really big struggle for medical groups. And so
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we started to
2:30
look at the operational side of provider comp
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administration
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and
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just really began to think about how to
2:37
optimize
2:38
getting getting docs paid on time and accurately.
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So from there, I transitioned into more of,
2:44
like, the technology administration side, and so that's
2:47
where I'm at now with Simplify. So our
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our job is
2:51
organizing all the contracts, organizing all the data
2:54
to true up those contracts, and then making
2:56
sure our docs are paid on time.
2:58
Got it. Got it. Thank you so much
3:00
for that introduction.
3:01
Let's dig a little deeper on provider compensation
3:03
as it's often described as one of healthcare
3:06
admins' most complex challenges.
3:08
Can you break down for listeners why that's
3:10
the case,
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specifically for physicians and advanced practice providers at
3:14
the medical group level?
3:16
Yeah. It's a great question. And I have,
3:18
an analogy I like to draw for folks
3:20
is
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provider contracts and provider compensation
3:24
is
3:25
sort of a combination
3:27
of
3:28
executive compensation
3:29
and a professional athlete's
3:31
contract. So
3:33
if you but at a at a much
3:35
larger scale. So if you think about a
3:36
c suite at an organization, you're talking about,
3:38
you know,
3:39
you know, five to 10 folks that have,
3:41
you know, what would be an executive
3:43
compensation package,
3:45
a pro sports team, you know, 20 to
3:47
30 folks.
3:48
When you think about a large medical group,
3:50
you could have two or 3,000
3:52
providers. So if you think about some of
3:54
the attributes of an executive compensation package,
3:58
fairly high dollars,
4:00
and a lot of funding lanes, or what
4:02
we would call it, or earnings. So
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if you have a regular,
4:05
you know, staff employee or, you know, a
4:08
a a staff nurse, they're gonna have, you
4:10
know, maybe
4:11
two ways that we pay them, a base
4:13
compensation and then maybe once a year a
4:16
bonus, you know, a good, better, best type
4:18
bonus. So that's pretty straightforward. You just put
4:20
that in payroll, and you just pay that
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out.
4:24
Physicians and
4:25
the analogy of executives
4:27
have many funding lanes usually. You might get
4:31
your base compensation,
4:32
a performance bonus, another bonus, maybe you're getting
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a stipend for some other thing you're doing,
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and that's how physician contracts look. So it's
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very common for
4:43
a physician or an advanced practice provider to
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have
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anywhere from, you know, four to
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seven different
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ways that they're getting paid throughout the year.
4:53
They may get call coverage stipends.
4:56
They could get a medical directorship.
4:58
They'll obviously get incentives for productivity or patient
5:01
care,
5:03
quality bonuses. So you start to stack up
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all of these individual funding lanes, and each
5:08
of them need
5:09
a careful hand to make sure that what
5:11
you're paying the doctor matches what's in the
5:13
contract at the right time, at the right
5:15
moment.
5:16
Absolutely. And with all this complexity, there's bound
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to be a lot of friction points.
5:22
Why should leaders be paying closer attention to
5:24
those friction points at this moment? And why
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does the urgency feel particularly acute right now?
5:30
Well,
5:31
ensuring our providers are
5:34
unencumbered
5:35
and focused on patient care has to be
5:36
first and foremost. Right? So you wanna make
5:38
sure their docs are paid,
5:40
accurately
5:41
and on time and that they're not it's
5:44
that's not in the back of their mind
5:45
or they're not disgruntled. So there's both a
5:48
strategic side of provider compensation, you know, making
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sure we're paying our providers the right amount
5:53
and,
5:55
in the correct manner. So that's where
5:57
kind of the whole strategy side comes into
5:59
place is, you know, benchmarking and making sure
6:01
that that's all working very well. And there's
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really great consultants out there and really great
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strategists out there that can do that work.
6:09
Then on the other side is where I
6:11
I'm
6:12
I'm myself and our team are more focused,
6:14
and that's making sure it's accurately paid out
6:16
the door.
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And
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you gotta get that right in order to
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make sure you're you have a happy workforce
6:22
and with ongoing
6:24
workforce shortages
6:25
and just other challenges.
6:27
It's it's, it's always
6:29
critical to make sure that, again, that workforce
6:32
is happy and paid and working.
6:35
Absolutely. And digging a little bit deeper there,
6:37
what strategies or tools have you seen work
6:39
well to ensure providers are paid accurately, transparently,
6:42
and on time? And how are you seeing
6:44
those efforts connect to broader organizational goals around
6:47
provider satisfaction,
6:49
recruitment, or retention?
6:51
Yeah. Great question. So
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there's always
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kind of an upstream
6:56
perspective that, you know, if you can create
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a very simple compensation plan, then you can
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administer that very easily and quickly and accurately.
7:05
That's,
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easier said than done. Right? We these are
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very strategic resources,
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and every specialty
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in the medical group needs a slightly different
7:14
compensation package, and we wanna incentivize them for
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the different
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activities they do and the work they do.
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And so as much as you wanna try
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to create a simple compensation
7:25
plan,
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that's
7:27
not
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always easy. And so we need to be
7:30
prepared as financial operators and administrators of those
7:33
comp plans. We we need to be prepared
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to administer
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even very complex compensation plans. And so
7:40
not to
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plug our company too much, but this is
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really the business that Simplify is in is,
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our technology platform is built to house all
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the details of your contracts, all of the
7:51
rates and rules and thresholds and levers and
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data.
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And then our platform
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calculates incentives. It calculates bonuses. It does all
8:00
of the financial math.
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It produces
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payment files for payroll to actually remit those
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dollars, and then all of that information
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is made available back to the organization as
8:11
administrators.
8:12
And then to the latter part of your
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question, we give our providers a mobile app.
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They can see their compensation.
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They can see their RVUs that were,
8:22
credits to them as part of their compensation
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or their shifts.
8:25
They can raise a pay request, ask questions.
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And so it's kind of two sides. It's
8:30
first making sure the dollars are reconciled correctly,
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and then it's making that transparent to providers.
8:37
And, again, to your latter question or or
8:40
points around how does this improve provider satisfaction
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and retention and recruitment, we we spend a
8:45
lot of time looking at that data and
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validating it, and we do see a correlation
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across all three of those indicators. So when
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folks are using our technology and our application,
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we see provider satisfaction improves,
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their productivity actually improves as well because they're
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seeing, you know, their,
9:03
their RVU accrual or their shift accruals in
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real time. And even on the retention front,
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we have clients who actually
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will showcase our platform as part of the
9:14
recruitment and say, hey. Look. We're gonna be
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very transparent about your compensation.
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We're gonna give you all the details in
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your pocket. You can see everything. You can
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Some docs just like to get their
9:24
compensation, and they're happy, and they don't dig
9:26
in. Others are very curious, and they wanna
9:28
count up every
9:30
unit or every shift or every call coverage,
9:33
shift that they took. And that's totally fine,
9:35
and we make that information available back to
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them. Oh, that's great. And can you share
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an example of an organ organization that has
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done this particularly well?
9:44
Yeah.
9:45
You know, without without naming
9:47
specific organizations, we we've looked at the performance
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of all of our customers and then
9:54
folks that we we meet in the market
9:56
as well. And what we observe consistently is
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you really need to have
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three components of your compensation program working well
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in order
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to be a higher performing compensation
10:09
program. So the three sort of heads that
10:12
we look at are,
10:14
the in the actual administrative team, so the
10:17
folks that are
10:18
crunching the numbers on the client side, and
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they're the ones who are really the owners
10:22
of the contracts,
10:23
you know, having a good platform like ours
10:25
to keep it all organized and to
10:27
at least try to automate or optimize those
10:30
processes, and then any strategic partner. So, again,
10:32
your
10:33
consultants or
10:35
your fair market valuation partners. So that's really
10:38
the team at a medical group. It's the
10:40
in house team, whatever technology you're using.
10:44
And then, you know, if you have a
10:45
third party advisor, you know, that that's the
10:47
bus as I like to say, and all
10:49
three of them have to be working in
10:51
concert and in partnership
10:53
to perform well. And so
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when we look across
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the organizations we work with and the folks
10:59
that we talk to on a daily basis,
11:02
if any of those are falling short, then
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they're gonna they're gonna miss payments to their
11:06
docs. They're gonna
11:07
miscalculate compensation. They're gonna be late. They're going
11:10
to,
11:11
you know, miss out on transparency for their
11:14
providers. And so
11:15
one thing and and so we've seen that.
11:17
So organizations
11:19
one of the common fail points there are
11:22
the in house administrative teams. So provider comp
11:25
is a very
11:27
nuanced part of health care finance, and it
11:29
takes
11:30
a long time
11:32
to learn the trade, so to speak. And
11:34
so there's a big shortage of folks out
11:37
there that actually can
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sit down,
11:41
pick up, you know, 500 provider contracts, and
11:44
understand how to correctly administer
11:47
them. It's a real challenge, actually. And when
11:50
folks leave the medical group, they take a
11:52
lot of information with them. There's a lot
11:54
of institutional knowledge that gets lost. And so
11:57
that's gonna be the thing that we see
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most often. The organizations that have a strong
12:02
administrative infrastructure
12:04
are gonna perform a lot better. And to
12:06
fill that gap and there's a little bit
12:08
of breaking
12:09
breaking news, we've
12:11
decided as a company, Simplify,
12:14
to step in and support the administrative side.
12:16
So we've been super focused on the technology
12:19
side, building out a great technology stack to
12:23
automate as much as possible, but we continue
12:25
to see our clients and prospective clients struggle
12:28
with administrative teams and, again, lose people or
12:32
hiring the the wrong analysts and things like
12:33
that. And so
12:35
starting really this quarter, Simplify has launched a
12:39
management services organization,
12:41
and that gives us another tool in our
12:44
tool belt where we can come in and
12:46
fill those gaps for an organization. So if
12:49
you've lost, you know, your analysts or you
12:52
need more bodies or more resources,
12:54
we can now fill that as well. And
12:56
that's something we're really excited about because we
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just feel like the market's been asking for
13:00
it.
13:01
Very helpful context to such a complex challenge.
13:04
And now moving forward and looking ahead, what
13:07
are the key capabilities or characteristics
13:09
that leaders need to be building towards to
13:11
ensure compensation strategies they're delivering for both the
13:14
organization
13:15
and its providers?
13:16
And what's one concrete step that they can
13:18
take now to move in that direction?
13:21
So I I can think of two things.
13:23
So one is on the actual plan
13:25
the compensation plan side, so how how we're
13:28
paying our doctors. And I think the biggest
13:30
thing,
13:31
a lot will likely stay the same from,
13:33
like, how we pay our providers. So we'll
13:36
continue to pay them fixed compensation, and we'll
13:39
continue to pay them stipends and
13:41
incentives for
13:43
being an administrator,
13:44
medical director,
13:46
taking call coverage, all of those things. So
13:48
we'll continue to incentivize them for that. The
13:51
one thing that is
13:54
new and will change is
13:57
just the ongoing move to value based care.
14:00
So
14:01
as organizations
14:03
have you know, we want to align,
14:06
for the most part, how we compensate our
14:08
physicians in a similar manner as how we're
14:11
capturing revenue as a health system. So for
14:13
the, you know, better part of the the
14:16
last, you know,
14:17
thirty or fifty or a hundred years or
14:19
whatever,
14:21
health systems
14:22
are typically reimbursed based on fee for service.
14:25
And so that's
14:27
most commonly how we incentivize our providers. If
14:29
they're producing more, we incentivize them for that.
14:33
As we shift to value based care and
14:35
the revenue profile changes for a health system
14:37
and we're paid less on or our our
14:40
revenue is coming in
14:42
through, you know, value based metrics, patient panelment,
14:46
things like that.
14:47
That's a different
14:48
incentive model. So
14:50
as organizations' revenue moves to value based care,
14:53
there's a big decision.
14:55
Do we need to align
14:56
our incentives to physicians with that new revenue
14:59
model? Because if we're paying our providers
15:02
on productivity, on RVUs,
15:04
but all of our revenue is coming in
15:06
through capitated
15:08
value based contracts,
15:09
there's a disconnection
15:10
between our revenue model and our cost model.
15:14
So
15:15
that's a big decision folks are making right
15:18
now.
15:19
Do we do a little bit of both?
15:21
Do we move entirely? Do we keep waiting?
15:23
And so
15:24
just from a a compensation
15:26
plan side, that's gonna be most important.
15:29
That's gonna be the big thing folks are
15:31
thinking about. From an operational standpoint, I think
15:33
it goes back
15:35
to what
15:37
what I was just sharing about making sure
15:39
that you've got a the right infrastructure
15:41
to manage those dollars. You know,
15:44
a a large integrated health system
15:46
could have upwards of a billion dollars in
15:50
funds flowing to their providers, and
15:53
that's gonna be one of the largest
15:56
line items on their general ledger. And so
15:58
making sure
16:00
the medical group are being great stewards of
16:02
those dollars and taking care of them and
16:05
making sure they're reconciled correctly
16:08
is gonna be very,
16:09
continue to be very important. So, yeah, we're
16:12
just happy to be a great partner to
16:14
health systems to make sure the docs are
16:16
getting paid. Absolutely.
16:18
And, Jared, I wanna thank you for your
16:19
time today. But before I let you go,
16:21
is there anything else that listeners should know?
16:23
No. I I think just
16:25
we always want to
16:27
help folks understand that this this is an
16:29
office
16:30
in the health system and in the medical
16:32
group. Like, for a long time,
16:34
provider compensation
16:36
administration
16:37
was just kind of done off the side
16:38
of the desk of
16:40
accounting or FP and A or even, you
16:44
know, just payroll. So there's many organizations out
16:47
there that don't even have a dedicated office
16:49
for this. They're just kind of retooling some
16:52
of their other finance analysts and administrators. And
16:56
so
16:57
it's very it's a very good idea to
16:59
have a dedicated office for this, make sure
17:01
you've got at least some infrastructure
17:04
and some accountability in terms of who's owning
17:06
the these contracts for provider services
17:09
and who's making sure the dollars are paid
17:10
accurately. So bringing awareness
17:13
to
17:14
the the health systems to not, you know,
17:17
you know, make sure you're thinking about your
17:18
provider comp team and make make sure that's
17:21
a strong infrastructure for the medical group.
17:23
Absolutely. Well, that's a great note to end
17:25
on. Jared, I wanna thank you for your
17:26
time and insights today. And we also wanna
17:29
thank our podcast sponsor, Simplify.
17:31
You can tune in to more podcasts from
17:33
Becker's Healthcare by visiting our podcast page at
17:35
beccarshospitalreview.com.
17:37
Thank you. Thank you.