Career and Life Planning Guidebook for Medical Residents

CAUTION – Ensure that the fee schedule does not disproportionately reward or penalize certain procedures over others. Net Collections – The actual cash received for services rendered is referred to as net collections. This financial performance metric is influenced by payer mix and revenue cycle efficiencies and can be used to calculate physician compensation in a variety of models, including as a percentage of collections. Private practices may also choose to distribute net practice earnings (or a defined compensation pool) based on each physicians’ percentage of net collections. CAUTION– Payermix and revenue cycle inefficiencies can materially influence net collections. For example, physicians with a higher Medicare/Medicaid payer mix may be disproportionately penalized under a net collections model compared to physicians with a better payer mix. Productivity Pitfalls As with anything, there are pitfalls to consider and avoid if possible, on a production-based compensation model, including. Transitioning from a guaranteed salary too early. Not understanding the differences in com- pensation models (e.g., charges vs. collections vs. wRVU). Not understanding how advanced practice provider productivity is accounted for in the compensation plan. Under a production-based compensation model, here are some best practices to consider: Utilize a shadow period leading up to the transition so you understand the mechanics of the newproduction-based model and its impact on your calculation. Determine in advance how material changes in the practice or the services provided will be addressed in the compensation plan. Develop a compensation “floor” of which you cannot earn less, regardless of your actual level of productivity. Qualifying Compensation Questions Whether your salary is evergreen (rare), or at some point you transition to a production-based salary, you want to ensure you understand the productivity formula or risk taking a pay cut. Below is a list of questions which will help you measure the income potential and likelihood of maintaining or increasingyour compensation during, and as you transition, to a production-based salary. Can you walk me through the compensation and productivity structure? Is there a productivity formula? If so, how does it work? If I do a good job, what is the income potential for: Year 1? Year 2? Year 3? What is the total compensation range earned by current physicians? Low? High? Median? How have other physicians adapted to a production-based salary? Physician Compensation 233 WWW.PHYSICIANCAREERPLANNING.COM