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Published June 16, 2020

Balancing Act: Physician Supply, Demand, and Call Coverage Compensation

Compensating physicians for emergency department call coverage (Call Coverage) in some circumstances is now commonplace in the healthcare industry. However, some specialists are not willing to provide Call Coverage for several reasons, such as quality-of-life concerns, managed care pressures, increased risk of malpractice suits by treating patients on an emergency basis, and the required additional time away from a physician’s practice of medicine. As a result, certain hospitals and health systems pay physicians to be on call. Paying a stipend (e.g., per diem) for unrestricted Call Coverage is a methodology currently used by many hospitals throughout the country.  However, a physician must be willing and available to provide Call Coverage before a hospital or health system can begin to evaluate compensation for the Call Coverage services.

The existing shortage of several physician specialties creates a challenge for hospital and health system executives. In particular, of the approximately 70 Call Coverage fair market value and/or commercial reasonableness opinions PYA issued in 2019 (i.e., projects for which PYA was engaged to provide only an opinion related to Call Coverage, not opinions for which Call Coverage was a supplemental component to an agreement), psychiatry tops the list of physician specialties. This reflects a high demand for help in establishing arrangements with mental health professionals.

Where else was assistance needed? We’ve compiled a list of top physician specialties, encompassing several for which PYA either provided consultative advice or conducted a fair market value and/or commercial reasonableness opinion this past year. Here’s what made the list. PYA notes cardiology, gastroenterology, ophthalmology, and urology tied for third place.

PYA’s “Top 3” Physician Specialty Call Coverage List for 2019

  1. Psychiatry
  2. Orthopedic Surgery
  3. Cardiology, Gastroenterology, Ophthalmology, Urology

Benchmark survey data also supports the difficulty in securing physician coverage in most of the aforementioned specialties. Specifically, the SullivanCotter, Inc. (SullivanCotter) 2018 On-Call and Telemedicine Compensation Survey Report indicates the top eight specialty call panels for which securing physician coverage is difficult, including: 1) neurosurgery, 2) gastroenterology, 3) otolaryngology, 4) trauma surgery, 5) obstetrics and gynecology, 6) ophthalmology, 7) orthopedic surgery, and 8) urology.

That psychiatry continues to top our lists of most requested consults appears consistent with the demand for physicians practicing in this specialty. As detailed in previous PYA findings, psychiatry was also the most requested specialty for which clients engaged PYA to determine fair market value and/or commercial reasonableness in 2019. This specialty also consistently appears on a Merritt Hawkins list of most requested recruiting assignments, further demonstrating additional need in this field.

One option to balance the supply of physicians with demand is allowing a physician to provide concurrent Call Coverage, if available and needed. Concurrent Call Coverage provides the hospital with efficient and potentially more cost-effective necessary coverage. SullivanCotter indicates that of the 59% of respondents that allow for concurrent coverage of more than one hospital within the same system on the same day, 50% provide additional compensation to these physicians for this coverage.

Additionally, as another potential solution, a hospital or health system may require an employed physician to provide gratis Call Coverage (i.e., a certain amount of Call Coverage provided by a physician in the emergency department as a term of his or her employment). In fact, SullivanCotter reports that 50% of respondents require their employed physicians to provide a minimum number of monthly Call Coverage hours or shifts prior to on-call compensation eligibility, reflecting a certain level of market consistency related to this practice.

Finally, as indicated herein, locating the physicians to provide the Call Coverage may be only “half the battle.” Financial relationships between healthcare providers and physicians must be at fair market value to meet certain regulatory requirements (i.e., the Stark Law and Anti-Kickback Statute). To ensure compliance with these regulations, healthcare providers should have a thorough understanding not only of a physician’s Call Coverage responsibilities, but also other factors including, but not limited to, the burden and intensity levels of the Call Coverage and the payer mix of the patient population treated by the physician on call, which all impact the determination of fair market value compensation.

With a team of dedicated professionals who focus on fair market value and commercial reasonableness, PYA has deep expertise in designing compensation plans that help meet both hospital and provider goals. PYA also has experience in helping hospitals and health systems develop economic alignment models in all specialties. If you would like information about Call Coverage arrangements, economic alignment models, fair market value and commercial reasonableness opinions, or physician compensation, or for assistance with any matter involving valuation, strategy and integration, or compliance, contact one of our PYA executives below at (800) 270-9629.

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