Health-Care Economics

Abstract

Health-care economics has become a health-care reform, and reforming the American delivery of care has become a cultural and political movement. Historical presentation of the evolution of the current “fee-for-service” reimbursement methodology is based on resource-based relative value scale (RBRVS) and the impact it has had on the economics of care. An analysis of “key” areas of the Patient Protection and Affordable Care Act of 2010 and the impact it has had on “Physician Reimbursement Reform.” The focus on “Alternative Payment Models” has led to the current trend toward “clinical integration” of physicians into health-care networks. A section on “Alternative Payment Models” are evolving in the market place today. Finally, we include a section on contracting for surgeons who have finished residencies/fellowship programs or surgeons who are moving toward “integration” into health-care networks. An analysis of these compensation models is offered by these integrated networks in order to assist surgeons with insight into evaluating these contracts during negotiations.

Appendices

Appendix 66.1

Physician Compensation Model 1: Guaranteed Salary

One-year contract:	$20,000 signing bonus
Base salary	$280.000/26 payments/40-hour workweek
Additional on call per diem	$500–750/day

Appendix 66.2

Physician Compensation Model 2: Work-RVU-Based Compensation

Utilizing a dollar conversion factor is defined as the numeric factor which physicians multiply wRVUs to calculate physician compensation.

• Year 1: $40.00/wRVU

• Years 2–5: $47/wRVU

• Bi-weekly draws approximately: $7000.00 (year 1)

• Reconciliations of draw: quarterly and semiannually “true update”

These updates can mean an augmentation for increased production or a “reduction” at the next update for not covering overhead.

Appendix 66.3

Physician Compensation Model 3: Work-RVU Compensation with a Base Salary (Guaranteed)

Five-Year Contract	$20,000 Signing Bonus (returned if terminate Employment before 24 months)
Base Salary Years 1–2	$300,000 which is approximately 6500 wRVUs at $45/wRVU
Base Salary Years 3–5	$300,000 but is subject to adjustment (calculated for a set time period) in advance of the first day of the next employment year and is based on a wRVU, over a period of time the preceding years.
Incentive Bonus Years 1–3
Work-RVU	Incentive Compensation/wRVU
6501–7500	$51
7501–9000	$53
9001–10,500	$55
10,501 or >	$57
Incentive Bonus Years 4–5	is based on wRVUs generated by Physician in excess of Tier One Baseline, which is multiplied by a “conversion factor” per wRVU which will be adjusted/based on an Independent Variable
Salary Cap	approximately $600,000