Renumeration of Physicians Rendering Services to the Hospital – 2004

Renumeration of Physicians Rendering Services to the Hospital

Reynaldo O. Joson, MD, MHA, MHPEd, MS Surg

Introduction

 

There are many schemes in renumerating physicians rendering services to the hospital.  The schemes vary from historical/traditional to rationalized basis.  The schemes vary from one sector or unit of the hospital to another.  Lastly, the schemes vary from one physician or one group of physicians to another.  Whatever be the scheme present in a hospital, it may end up in various unfortunate combinations, happy in one party and unhappy in another, advantageous in one party and disadvantageous, in another, or it may also end up in a fortunate ideal situation, where the physicians and the hospital administration are mutually satisfied with the arrangement and are working harmoniously to reach a common goal.

Needless to say, the best scheme will be one in which the physicians and hospital administration found mutually satisfactory. The questions – what is this best scheme and how is this arrived at?

Intensive search of the Internet yielded no answers to the above questions.  I just have to utilize some basic management principles to answer the questions and I came out with this general answer: the best scheme will be one that is rationalized (with basis), standardized, and equitable.

I will expound on this answer by using a specific hospital (XXX Hospital) as a case study.

Situational analysis of XXX Hospital with regards to physicians’ renumeration

 

In XXX Hospital, there are hundreds of physicians contributing to its financial stability.

What are the different kinds of physicians with respect to hospital’s renumerating their services?

The physicians can be divided into the following based on several categories:

  1. Practicing or nonpracticing physicians
  2. Physician-managers or non-physician-managers
  3. Hospital-employed or non-hospital employed physicians for whatever task
  4. Physicians-given honoraria or physicians-not-given honoraria

The following tables show the relative distribution of the different kinds of physicians:

Table 1: Relative distribution of physician-managers, hospital-employed physicians, and those receiving honoraria as to whether they are practicing medicine or not.

Practicing Nonpracticing
Physician-managers +++ + (rm, ba)
Hospital-employed ++ + (rm, ba)
With honoraria +++

Table 2: Relative distribution of physician-managers whether they are hospital-employed or with honoraria.

Hospital-employed With honoraria
Physician-managers + +++

 

Should all physicians be renumerated?

Not all the physicians in the hospital are entitled to renumeration.

Only those who rendered services for the hospital on an explicit request by or contract with the hospital administration are entitled to renumerations.

Practicing physicians

Physicians using the facilities of the hospital to practice medicine or their profession are not entitled to renumerations from the hospital unless they are explicitly employed or contracted by the hospital.  Examples, internists, surgeons, pediatricians, obstetrician-gynecologists, radiologists, laboratory medicine specialists, pathologists, physiatrists and other specialists are not entitled to renumeration from the hospital when they practice their specialty unless they are explicitly employed and contracted by the hospital. They are given the privilege to practice their specialty given the facilities established by the hospital.

Physician-managers

Physicians appointed, employed or contracted by the hospital to be managers of the hospital or a unit within the hospital should be renumerated either with salary or honorarium for services rendered.

Present situation

In XXX Hospital, at present, there is no written policy on physicians’ renumeration.  The scheme has been on a per need basis and perpetuation of a traditional practice whose rationale is not clear.  There is no standardized hospital-wide scheme.  It is fraught with complaints of inequity and feeling of dissatisfaction from both physicians and the hospital administration.  There is, therefore, a need to come out with explicit policies on renumeration of physicians which should be rational, standardized, and equitable.

Goal

To formulate policies on renumeration of physicians that will promote optimal hospital performance.

Objectives

To formulate policies on renumeration of physicians that should be rational, standardized, and equitable.

Rational policies – means policies that are systematically arrived at and with sound basis.

Standardized policies – means policies that can be used across all units in the hospital.

Equitable policies – means policies that will as much as possible promote a scheme that is mutually acceptable by both physicians and the hospital administration in terms of reasonable compensation and operational expenses.

Impact expected

 

Rational, standardized, and equitable policies on renumeration of physicians that will promote optimal hospital performance in terms of quality service and financial stability.

Processes in formulating the scheme

Context and input

The statements on which physicians should be renumerated.

Only those who rendered services for the hospital on an explicit request by or contract with the hospital administration are entitled to renumerations.

Practicing specialists are not entitled to renumeration from the hospital when they practice their specialty unless they are explicitly employed and contracted by the hospital. They are given the privilege to practice their specialty given the facilities established by the hospital.

Physicians appointed, employed or contracted by the hospital to be managers of the hospital or a unit within the hospital should be renumerated either with salary or honorarium for services rendered.

Process

Units where physicians are involved and where renumeration is an issue.

Category of unit Samples of units and positions
Administration Medical Directors

Assistant Medical Directors

Clinical departments without a specific cost-unit Anesthesia, Surgery, Medicine, Family Med, Pedia, OB-GYN, ENT, Ophtha, Dental, Ortho
Clinical departments with a specific cost-unit ER, IMSD, Rehab Med
Ancillary service departments with a specific cost-unit Radiology, Nuclear Med, Laboratory and Patho, Heart station, Pulmonary Lab
Committees Committee on Medical Services, Committee on Medical Education and Training, Committee on Research, Committee on Credentials and Membership, ORCOM, Infection Control Committee, Ethics Committee, Blood Transfusion Committee, Medical Records Committee, Quality Council

Types of services that are usually rendered by physicians in the different units.

Category of unit Samples of units and positions Type of services
Administration Medical Directors

Assistant Medical Directors

Managerial

(may be private clinicians at the same time)

Clinical departments without a specific cost-unit Anesthesia, Surgery, Medicine, Family Med, Pedia, OB-GYN, ENT, Ophtha, Dental, Ortho Managerial for the officers (may be private clinicians at the same time)

Private clinicians for the members

Clinical departments with a specific cost-unit ER, IMSD, Rehab Med Managerial for the heads

(may be private clinicians at the same time)

Private clinicians for the members

May be employed clinicians (ER, IMSD)

Ancillary service departments with a specific cost-unit Radiology, Nuclear Med, Laboratory and Patho, Heart station, Pulmonary Lab Managerial for the heads

(may be private clinicians at the same time)

Private clinicians for the members

May be employed clinicians

Committees Committee on Medical Services, Committee on Medical Education and Training, Committee on Research, Committee on Credentials and Membership, ORCOM, Infection Control Committee, Ethics Committee, Blood Transfusion Committee, Medical Records Committee, Quality Council Managerial for the heads and members (may be private clinicians at the same time)

Thus, physicians appointed by the hospital to the administration unit, clinical departments without a specific cost-unit, clinical departments with a specific cost-unit, ancillary service departments, and committees may have the following activities, singly or in combination:

  1. Managerial functions
  2. Private practice of their specialty
  3. Employed practice of profession or specialty

The hospital should compensate for the managerial functions and employed practice of profession of the appointed physicians and NOT for the private practice.

Thus,

1.      The medical director and assistant medical directors should be compensated for their managerial functions.  If they are allowed to do private practice in the hospital, there should be no compensation for this privilege.

2.      The officers of the clinical departments without a cost-unit should be compensated for their managerial functions.  .  If they are allowed to do private practice in the hospital, there should be no compensation for this privilege.

3.      Clinical departments with a cost-unit (ER, IMSD, Rehab Med)

3.1  The officers of the clinical departments with a cost-unit should be compensated for their managerial functions.  .  If they are allowed to do private practice in the hospital, there should be no compensation for this privilege.

3.2  The other physician-staff of the clinical departments with a cost-unit should be given renumeration if they are explicitly requested or contracted by the hospital administration to render services. If they are allowed to do private practice in the hospital, there should be no compensation for this privilege.

4.      Ancillary service departments with a cost-unit (Lab, Radiology, Nuclear Med, Pulmo Lab)

4.1  The officers of the ancillary service departments with a cost-unit should be compensated for their managerial functions.  .  If they are allowed to do private practice in the hospital, there should be no compensation for this privilege.

4.2  The other physician-staff of the ancillary service departments with a cost-unit should be given renumeration if they are explicitly requested or contracted by the hospital administration to render services. If they are allowed to do private practice in the hospital, there should be no compensation for this privilege.

4.3  The cost of an ancillary procedure should incorporate an agreed upon  professional fee of the physician rendering the service.  For example, the cost of an ECG should incorporate the cardiologist’s or reader’s fee for proper renumeration.  The cost of a chest-xray should incorporate the radiologist’s or interpreter’s fee for proper renumeration.

5.      The heads and members appointed to committees should be compensated for their managerial functions and their tasks.  If they are allowed to do private practice in the hospital, there should be no compensation for this privilege.

Hospital administration has to make decisions on the following issues related to compensation:

1.      Part-time or full-time managerial functions

2.      Part-time or full-time employment of physicians

3.      Terms of reference or job description for the physicians asked to render services for the hospital

4.      Number of staff needed for optimal hospital or unit performance

5.      Selection on physician-manager and staff

a.      Competency

b.      Commitment to hospital

c.      As much as possible no other hospital or clinic affiliations

6.      Amount of compensation (to be negotiated with the selected physician-manager and staff)

7.      Incentive schemes (may be considered)

Output

The scheme, if validated and hopefully, will be one that is rational, standardized, and equitable that will promote optimal hospital performance in terms of quality service and financial stability.

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