amga cfo presentation

University of Utah Community Physician Group (CPG)

Overview

AMGA CFO Leadership CouncilOctober 15, 2015

CPG Overview

• University of Utah Primary Care providers practicing in 8 U of U Health Care clinics

• 77,000 Primary Care patients along the Wasatch Front• Group has experienced growth over the last several years

• 7.9% 5 Year CAGR Professional Net Payments• 7.1% 5 Year CAGR wRVU (Productivity)• 8.9% increase in year over year visits

• Steady increase in Medical Staff – adding 10 CRNA

2012 2013 2014 Mid Year 2015204060

80100120

61.56

81.46 90.19101.4

# of CFTEs in CPG

# of CFTEs

CPG Footprint

N

Lehi-Future location

2013 Health Science leadership commissioned CPG to develop a new compensation plan

The new plan would need to focus on:• Simplicity • Compete more effectively in local market• Align more closely with national benchmarks• Incent for quality and productivity• Establish minimum productivity standards for

organizational financial stability

Initiative

CPG Compensation Model

1st step was analysis

CPG hired 2 consulting firms to evaluate:• Our current plan • Our readiness to make change • Our financial status

CPG Compensation Model

Consultant conducted a survey in December 2013 asking 19 representative providers for feedback on:

• strengths/weaknesses of current compensation plan • morale level regarding compensation• readiness for change • opinions on future compensation plan design

Readiness & Provider Feedback

CPG Compensation Model

Consultant Results:

Other weaknesses:

• Effectively no PTO

• Perception that bonus program is not sustainable in terms of funding

Other weaknesses:

• Tenure not recognized

• Not able to use best important quality metrics

• Specialists are different from primary care

• Don't like lag in setting base salaries as I'm building my practice

• Different fee schedules affect my compensation

• No comp for admin work

• wRVUs don't always recognize increased patient complexity

• Hard to communicate with assigned Financial Analyst

CPG Compensation Model

CPG Compensation Model

Consultant Results:

CPG Compensation Model

Areas of consensus

Consultant Results:

Transparent• Plan is easily understood and simple to administer

Productivity calculation is real time, based on 3-month rolling wRVU average• Approved leave time is excluded (FMLA, Maternity, Military Leave)• Eliminated base + productivity

Alignment of compensation with national benchmarks minus U of U retirement benefits (over the 90th %tile)

• MGMA, AMGA, SullivanCotter 3 year PCP averages

Incent for Financial, Quality, Access, Patient Experience, and Citizenship measures• FY15: Bonus Plan – shared “pot”• FY16: All providers will be included in incentive plan

Key Principles

CPG Compensation Model

Key Principles, cont.

CPG Compensation Model

Establish minimum production expectation• 50th%tile wRVU minimum expectation (based on the 3 benchmarks)

Hold Harmless• If a provider is at 50th%tile for wRVU then $/wRVU will be equal or better

than current $/wRVU (old plan)o i.e. no wage decrease if on production and at the 50th %tile or greater

• Guarantee salaries will be supported (will discuss in more detail on later slide)

Compensation rates, productivity benchmarks, and conversion factors ($/wRVU) are reviewed annually by CPG Compensation Committee

Compensation Planning and Exceptions • Compensation Committee (Review and Recommend) • CPG Executive Committee (Final Approval)

Key Principles: The FormulaSimple

• (wRVU x $/wRVU) + stipends*: adjusted by quality incentive• Use 3 month rolling wRVU average

• or (Guarantee): adjusted by quality incentive

Example for 3 months: 300 + 200 + 400 = 900/3 = 300 for 3-month wRVU rolling average

o 300 wRVU x $31.37 = $9,411.00 that month

*Stipends - Based on aggregate time of lost wRVU opportunity due to administrative time (i.e. Clinic Medical Director)

CPG Compensation Model

New Plan: Key Principles, cont.

CPG Compensation Model

3-Tiered Methodology

Recognize specialty differences• 3-tiers based on specialty wRVU production benchmarks

• < 50th percentile • 50 - 74th percentile• >=75th percentile

The tiers and primary care conversion factors are based on data provided by Sullivan-Cotter (consultant). They sent us 3-year national averages from 3 major reporting agencies.

Recognize primary-care similarities• Use primary care $/wRVU conversion factors

Adjustment of conversion factor to more closely align with compensation targets• Recognition of U of U benefits: % reduction of the national conversion factors

($/wRVU)

wRVU Tiers, MD DetailProductivity is benchmarked by 3 conversion rate tiers

• Primary care conversion factor ($/wRVU)• Specialty-specific productivity (wRVU)

CPG Compensation Model

FP IM IM/Peds Peds

0-5094

5095-6168

6169+

wRVU Conversion Rate Tiers

TierProductivity

% tileBlended avg

$/wRVU

0-4722 0-4911

4723-5273 4912-5862

5274+ 5863+

1

2

3

31.37$

35.76$

38.26$

<50th 0-4886

50th-74th

75th+

4887-5884

5885+

wRVU Tiers

3 tiers are used – Annual wRVUs, adjusted by cFTE, are measured

against benchmark tiers – Example: 4000 annual wRVUs at 0.75 cFTE

• 4000 / 0.75 = 5333 normalized wRVU• Compare to 3 tiers• Falls into the 50-75th%tile, Tier 2 $35.76/wRVU

CPG Compensation Model

Apply Conversion Factor$/wRVU rate from the appropriate tier is then applied to the 3-month rolling wRVU average

• Example continued– 4000 / 0.75 = 5333 normalized wRVU (Tier 2 = $35.76)– 333.33 = 3 month rolling average– 333.33 x $35.76/wRVU = $11,920 monthly salary– $11,920 x 12 months = $143,040 annual salary

CPG Compensation Model

wRVU Tiers, MD DetailProductivity is benchmarked by 3 conversion rate tiers

• Primary care conversion factor ($/wRVU)• Specialty-specific productivity (wRVU)

CPG Compensation Model

FP IM IM/Peds Peds

0-5094

5095-6168

6169+

wRVU Conversion Rate Tiers

TierProductivity

% tileBlended avg

$/wRVU

0-4722 0-4911

4723-5273 4912-5862

5274+ 5863+

1

2

3

31.37$

35.76$

38.26$

<50th 0-4886

50th-74th

75th+

4887-5884

5885+

* At each annual review, if the next tier is reached, the higher $/wRVU rate will apply to all wRVUs

wRVU Tiers, APC DetailProductivity is benchmarked by 3 conversion rate tiers

CPG Compensation Model

APC

24.88$

27.19$

29.49$

2 50th-74th

Conversion Rate Tiers

TierProductivity

% tile

wRVUBlended avg

$/wRVU

3525-4277

1 <50th 0-3524

3 75th+ 4278+

Incentive Plan• Transition from bonus to bonus plan + risk• For providers on production model• Points calculated quarterly

• Financial 10%• Organization Patient Experience Goal 10%• Quality 40%• Access 20%• Attendance & Citizenship 20%

• Up to 5% of quarterly wages at risk • Potential to earn additional 5%• Points are weighted based on productivity tiers

• Points for higher producers will carry a higher $ value

CPG Compensation Model

% Points Earned Adjustment Factor0% -5.0%

25% -2.5%35% -1.5%40% -1.0%50% 0.0%75% 2.5%

100% 5.0%

Guarantee PrinciplesNew provider guarantees

• Set at 50th%tile CPG conversion rate and national productivity by specialty• Signing bonus available upon Compensation Committee approval • Offered up to 2 years maximum • If provider not able to reach 50th %tile after 2 years, gap coverage supplement,

not salary adjustment, until targets are met

Established provider guarantees• Monthly gap coverage • Guarantee end date is established at guarantee start date• If beyond 2 years past hire date, an individual plan to move to productivity

compensation plan will be approved by Compensation Committee and presented to CPG Executive Committee

• Gap coverage supplement, not salary adjustment, until targets are met

CPG Compensation Model

Example of New Plan Report

Business Case for Increasing ProductivityProvider X 1.0 cFTE <25th %tile

• Current wRVU = 3,919.25• 50th %tile wRVU for FP = 4,887• $64.40 wRVU reimbursement rate

Example Calculation:4,887-3,919.25 = 968 x $64.40 = $62,323 in increase net payments$62,323- $34,616 (increased salary Tier 1 – Tier 2) = +$27,707 Net Revenue/year

If all <50th %tile providers in CPG are brought up to the 50th %tile = $1 million net revenue and increase patient access

CPG Compensation Model

Thank You