Cardiology: Equal Shares Method Appears to Be the `In Thing’

Cardiology: Equal Shares Method Appears to Be the `In Thing’

The equal shares pay methodology appears to have a strong grip on many “full service” cardiology groups despite the wide gulf between the billings and receipts of members of different subspecialties.

“I’ve heard there’s a growing trend” toward equal shares, says Joel Sauer, CEO of 34-physician, multispecialty Medical Group of Ft. Wayne (Ind.), whose 16 cardiologists went to equal shares among themselves in January 2000. Fran Curns, CFO of 13-physician, single specialty Reno (Nev.) Heart Physicians, also believes there’s such a trend; that group has been on equal shares for seven years. Of the seven groups interviewed by PCR for this article, four are on equal shares, one effectively is an equal shares system for the physicians who complete all 10 tasks on a pay system “menu” (see article p. 1), one left equal shares in January 2001 for a partial productivity system — and just one is an unabashed, 80% production pay system.

The two “sides” of cardiology, in terms of billings and collections, are:

* “General” cardiologists. These are in the majority, not only in the profession but in almost every individual group. Their subspecialties are “noninvasive” and “invasive.” They primarily do outreach, diagnostic and disease management work: receive referrals from primary care physicians, run diagnostic tests, treat and monitor patients on drug regimens (with conditions such as congestive heart failure), and, for invasive subspecialists, perform cardiac catheterizations. Then — and this is crucial for the equal shares rationale — they refer patients who need angioplasties and other advanced procedures to the other “side” of the shop.

* Higher-end subspecialists. These are mainly interventionalists, who perform angioplasties; electrophysiologists, who deal with the electric impulses in the heart; and nuclear cardiologists, who take pictures of cardiac blood flow with the aid of nuclear isotopes.

The higher-end people put in one to two years of additional fellowship time after the three-year cardiology residency that invasive/noninvasive people have put in. Everyone goes through a three-year internal medicine residency, after medical school and before the cardiology fellowship. Today, very few new cardiologists train only in noninvasive techniques. Most train either for an invasive or interventionalist subspecialty,

To be sure, equal shares have not swept all of cardiology, or the substantial pay differentials detected by benchmark surveys would not exist. According to MGMA, national median compensation in 1999 for noninvasive cardiologists was $279,000; for invasive cardiologists, $300,000; and for invasive/ interventionalists, $364,000.

Sauer echoes many other managers when he says that many interventionalists really endorse the feeling that “I wouldn’t have a case to do if I didn’t have you general cardiologists out there rainmaking.” As for general cardiologists, Sauer adds, they believe that despite their lower billings, they have market clout because “they control the patients.”

He gives an example of a cooperative action taken in his group that might have been impossible had the switch to equal shares not happened. The American College of Cardiology has recommended standards that physicians performing angioplasties do at least 50 per year to remain fully familiar with the technique. The Ft. Wayne group decided to follow this standard, forcing three interventionalists to step aside. Two of the three would have preferred to continue doing such work, he says, and had there been a financial penalty, persuading them might have been impossible.

In addition to Saner’s and Curns’s groups, the practices PCR interviewed on equal shares are the 26-physician St. Paul (Minn.) Heart Clinic and the 12-physician South Denver (Colo.) Cardiology Associates.

Susan Antol, director of financial services of the St. Paul group, says the equal shares method lets physicians devote time to administrative and research tasks, and exchange rotations. Brenda Lambert, practice administrator for the South Denver group, says the method is an essential part of the group’s highly cooperative internal culture. Both say that the method is not an impediment to recruiting higher-priced interventionalist fellowship grads.

Production Formulas Work Elsewhere

At 12-physician West Penn Cardiology Associates in Pittsburgh, the pay system has been 80% collections, 20% equal shares for the past 20 years, says administrator Thora Jackson, FACMPE. Expenses are divided by equal shares. The system reflects the substantial pay differences between the subspecialties, Jackson says, and works well for the group.

Jackson says the cardiologists in her group have suffered actual income losses over the last several years, in spite of seeing more patients and performing more procedures. The culprit is sharply falling Medicare reimbursement for many cardiac procedures, cuts that commercial payers then follow. Several other practice managers say their group’s incomes have failed to keep pace with inflation.

At 32-physician Heart Care Centers of Illinois, in Mokena, Ill., a Chicago suburb, the 25 cardiologists found their group had grown to the point where, given the disparities of workload and work ethic, the time had come to leave equal shares, explains CEO Bob Donovan.

Under their January 2001 pay system, the cardiologists divide themselves into four PODS, or work groups. Pay is still one-half equal shares among all the cardiologists, and it’s still equal shares within the PODS. But the members of each POD are able to retain one-half of their own revenues after subtracting their direct expenses and equal shares of the group’s overall costs.

Contact Sauer at (219) 432-2297 or jsauerOmgfw, com; Curns at (775) 327-8144; Antol at (651) 310-1692 or santol@stpaulhc.com; Lambert at (303) 744-1065; Jackson at (412) 682-1200 or wpcapcOaol.com; and Donovan at (708) 478-3600 or bdonovan@heartcc.com.

RELATED ARTICLE: Cardiology References

Other items in PCR about cardiology compensation and economics are: (1) hospital/medical group joint ventures and strategies (3/01 p. 6); (2) pay and production indicators (4/01 p. 5); (3) group compensation trends in 2000 (3/29/00 p. 1); and (4) the article on page 1 about a “menu-driven” group pay plan.

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