Most GI Groups Use Profit Plans, But Some Divide Pay Equally
Most gastroenterology practice managers interviewed by PCR say their groups use “profit center” pay plans in which each physician’s share of collections is reduced by his or her share of costs. The groups vary widely in how they calculate production and costs.
Some “GI” (for gastrointestinal medicine) groups, probably a minority, find that the equal shares pay method supplies a sufficient group production incentive and strong internal cooperation benefits.
Regardless of pay plan, gastroenterologists are extremely busy, with patient waiting times for diagnostic procedures, especially colonoscopies, running as high as several months. Several managers cited television personality Katie Couric’s getting the procedure on her morning show, following her husband’s death from colon cancer, as having jump started already high demand. The chief financial officer of a large Southern GI group, who declines to be identified, says that some patients get their procedure the day they turn 50 — the age at which this check is first recommended for all patients. Happy Birthday!
Medicare’s reimbursement rates for performing colonoscopies have fallen precipitously from 1998 through Jan. 1, 2002, and commercial carriers in some markets are starting to follow suit (see next article).
Many Expenses Allocated by Equal Shares
Edward Freeman, chief operating officer of Greater Cincinnati Digestive Health Network, says his group measures production by collections. Then its 11 owners divide certain expenses, such as marketing, billing and administration, by equal shares. Finally, the expenses of its six offices and 12 or 13 satellites are allocated to the physicians who work there. If more than one works in an office, they usually divide expenses by equal shares. The expenses are subtracted from production to get physician compensation.
Freeman says his group struggles to offer pay that’s competitive on a national scale, because the Cincinnati market has extremely low reimbursement rates.
Ida Manzanares, controller of Mountain West Gastroenterology, which is based in Salt Lake City, describes a very similar pay system for her 11 owners, except that expenses for billing (not for administration) are allocated according to each physician’s work RVUs.
A six-physician Southeastern GI group pays its four partners steady monthly salaries, says its practice administrator, who declines to be identified. Each quarter, the group figures out the amount that can be paid in bonuses. To distribute the bonus pool, it calculates each owner’s percentage of the sum of the owners’ receipts, and applies that percentage to both group-wide receipts and most expenses. Then it subtracts each physician’s personal expenses, such as for continuing medical education, cell phones and professional dues.
The Southern CFO cited above says the group divides its bonus pools by individual shares of work RVUs. One reason for using RVUs is the variety of its reimbursements, including Medicare’s low levels and a capitation contract. The group divides its entire overhead by equal shares, except for personal expenses that are allocated individually. A reason for that is the group’s large size.
This group’s pay levels range from approximately $100,000 for someone who works about 25 hours a week up to $450,000 or $500,000 for someone who works at least 60 hours a week. The median pay level is about $200,000. The group offers physicians generous benefits, including profit sharing, and malpractice, disability and health insurance.
Clackemas Gastroenterology Associates in Oregon City, Ore., has paid its five owners by equal shares for many years. This includes earnings from an ambulatory surgery center and other real estate the physicians own, says Administrator Gail Dupell. When the group offers partnership to an employed physician, ownership in the real estate is offered as well. She declines to disclose the amount of compensation.
Hot lob Market
It’s not surprising that pay levels for GI recruits are rising fairly rapidly, says the Southern CFO. There is extremely high demand to perform procedures. At the same time, there are relatively few new GI fellowship grads. Another practice manager adds that the fellowship, which follows a three year internal medicine residency, currently is being lengthened from two to three year’s, which temporarily depresses the number of fellowship grads.
Outside physician recruiters report increases of 7% to ]0% per year in starting pay for GI grads, and slightly higher boosts in day rates for temporary gastroenterology jobs (PCR 1/02, p. 1, and 2/02, p. 1).
Manzanares says her group hired two physicians out of fellowship last July. Her group benefits from several members with ties to teaching hospitals in Salt Lake City and Pittsburgh, and work that includes transplants in addition to regular gastroenterology.
Dupell’s group will hire three new physicians later this year, one to replace a retiree and two for expansion. It used the recruiting arm of Cejka & Co. in St. Louis to find candidates to interview. The group is so busy that even with a high unemployment rate in the Portland area (8%), waiting times for colonoscopies have dropped only from three to two months.
Other PCR items on gastroeneterology: (]) compensation and production indicators, 2/02, p. 4; (2) factors affecting compensation, 1/02, p. 11; (3) compensation trends in 2000 (]0/25/00, p. 4).
Contact Freeman at (513) 936 0334 or efreeman@gcdhn.com; Dupell at (503) 213 5457 or gdupell@clackemasgi.com; and Manzanares at (801) 944-3196 or Imanzan@mwgi.com.
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