A Physician Entrepreneur's Blog Part 3 - The Business of Medicine

June 11th, 2012 3 Min read A Physician Entrepreneur's Blog Part 3 - The Business of Medicine Blog
A colleague called me confused and concerned after being told by his department chair that his annual salary may be decreased because he didn?t have enough RVUs. After doing his own research, he found out that his RVUs (Relative Value Units) were based on patients seen at only one of his clinical sites, not both of his clinical locations! Perhaps many of us have found ourselves in this or a similar position and have asked:
  • Exactly, what is an RVU anyway?
  • How are RVUs calculated?
  • Who is responsible for monitoring RVUs?
How productive are you, and how do you know? Most new physicians are challenged to understand the compensation models in employment situations. To date, volume-based compensation models (based on the number of patients seen, the amount billed or collected by a physician) have formed the primary basis of most physician compensation models. RVUs are now being used more frequently as the basis of productivity-based compensation models. (MGMA, 2010) Medicare has actually used RVUs for years to calculate reimbursement payments for provider services. Additional resources regarding RVUs include the AMA, which has an RVU Calculator, and PedSource/Physician's Computer Company, which offers a RVU Calculator spreadsheet. RVUs are the measures used to quantify the amount of work or intensity of healthcare rendered by the physician, which is increased or decreased based on the complexity of the patient's medical condition. For example, a physician treating a patient with mild osteoarthritis of the knee will be allotted fewer RVUs compared to treating a patient with moderate to severe osteoarthritis of the knee complicated by a previous intra-articular knee fracture with a history of diabetes and peripheral vascular disease. Treatment of the latter patient obviously requires more work on behalf of the physician; the relative value of the care rendered is higher for this patient, i.e. a higher RVU would be assigned. Currently, many physician-employers are moving toward compensation models based on RVUs. Unfortunately, there is no one set formula or standard set of rules in place to calculate RVUs. It behooves the physician to understand the formula being used at their place of employment, to inquire about who is monitoring the RVUs generated and with what frequency. To date, the issue with most volume-based compensation models is that with increased volume, quality may as a result be often compromised because the physician is forced to see as many patients as possible in a short period of time. Compromised quality in healthcare is unacceptable by both patients and physicians, however, many physicians often feel "stuck" by the pressure from administrators to see more and more patients in a limited time frame. Physicians know well that building the coveted physician-patient relationship takes time, but more and more physicians are becoming disenchanted by the limited opportunity to build these vital relationships with their patients, which are necessary to render the best patient care possible. Overall, the healthcare industry is moving away from volume-based measures and moving towards quality-based measures for healthcare delivery and compensation. Here's how you can stay on top of your RVUs. Take-home points for physicians:
  • Understand which compensation model is being used to determine your salary
  • Ask the question of how your RVUs will be calculated.
  • Ask for a monthly report reflecting:
  • The number of RVUs that you generated over the month from all sites. Or, the amount billed based on the number of patients that you treated over the past month, if you are under a productivity-based compensation model
  • Make sure you keep a patient log including diagnosis and procedure codes from all clinical locations. Tracking your patients and ultimately your productivity is YOUR responsibility. Don't assume that this will be monitored accurately for you.
  • Compare your patient log to the productivity report given to you by your organization for accuracy