The COVID-19 pandemic continues to impact nearly every industry in a multitude of ways. The healthcare industry remains distinctively affected, especially as we begin to analyze historical data collected during the public health emergency (PHE). As healthcare organizations rely heavily on benchmark surveys as a guide for physician compensation models, fair market value, and performance evaluation, it is essential to apply context and special consideration to recently published physician compensation and productivity benchmark survey data.
For each survey, the reported data is based on the prior year (i.e., 2019 surveys report data collected in 2018; 2020 surveys report data collected in 2019, etc.). For this reason, some organizations are understandably hesitant to fully rely on 2021 surveys moving forward, as 2020 data was heavily impacted by the COVID-19 pandemic. In fact, during the majority of 2020, as the pandemic escalated, elective procedures were suspended and people remained indoors, causing a notable drop in patient volume and physician productivity (i.e., work relative value units [wRVUs] and professional collections) in many instances. This change was particularly noticeable in certain medical and surgical specialties. However, the pandemic was not the only major change for healthcare providers over the last two years. In January 2021, the 2021 Medicare Physician Fee Schedule (MPFS) was implemented and included significant changes to wRVUs attributed to evaluation and management (E/M) codes. PYA expects to continue seeing variability in reported productivity data because of the 2021 MPFS and the continued COVID-19 pandemic when the 2022 benchmark data becomes available later this year.
In contrast to productivity, provider compensation has remained relatively steady. Some physician compensation, especially in medical practices, was sustained or supplemented by Paycheck Protection Program (PPP) loans, Health and Human Services (HHS) stimulus funds, or other governmental relief efforts (e.g., the Stark Waivers). This may have led to a normalization of physician compensation during 2020 and 2021, when a decrease in compensation may have been expected. As a result, relational metrics, such as compensation per wRVU and compensation to professional collections ratios, may be skewed in 2021 benchmark surveys. This shift could be particularly impactful on employers and physicians whose compensation formula includes a productivity incentive component based on a wRVU conversion factor. For these reasons, many organizations largely consider 2020 benchmark surveys to be the most reliable surveys currently available, as 2019 was the most stable year in the last two years.
To further examine these trends and quantify the potential impact on benchmarks, PYA reviewed survey data from 2019 to 2021 for the following specialties: anesthesiology, family medicine, pediatrics, general surgery, obstetrics and gynecology (OBGYN), and orthopedic surgery (collectively, the Specialties). Specifically, PYA averaged survey data as reported by the American Medical Group Association (AMGA) Medical Group Compensation and Productivity Survey: 2019-2021 Report Based on 2018-2020 Data, Gallagher 2019-2021 Physician Compensation and Production Survey, Medical Group Management Association (MGMA) 2019-2021 DataDive Provider Compensation Survey, and SullivanCotter, Inc. (SullivanCotter) 2019-2021 Physician Compensation and Productivity Survey Report to evaluate total compensation, wRVUs, American Society of Anesthesiology (ASA) units, compensation per ASA unit, and compensation per wRVU. The results of this analysis are presented in the following figures.
In comparing the percent change from 2020 to 2021 for all Specialties, total compensation remained steady or decreased slightly (-3%). In fact, total compensation did not change for half of the Specialties reviewed. However, all Specialties’ productivity (i.e., wRVUs and ASA Units) decreased between 2020 and 2021. As a result, compensation per ASA unit and compensation per wRVU may be artificially inflated (e.g., compared to prior years) for every Specialty in this sample.
For these same reasons, some survey organizations have released disclaimers along with their 2021 surveys to account for these shifts. As one example, SullivanCotter released a note with its 2021 survey indicating users “may observe greater than normal year-over-year changes for certain data.” SullivanCotter went even further to release a version of its 2021 Physician Compensation and Productivity Survey Report with COVID-19-adjusted data based on its normalization of key physician compensation and productivity metrics as well as a review of multiple years of SullivanCotter data.
As physician compensation and productivity surveys are still an important resource for healthcare organizations, PYA recommends the following strategies to mitigate the impacts of the variability within the survey data.
- Consider utilizing multiple physician compensation and productivity survey sources. Rather than relying on only one survey, expand the sample size by reviewing more than one data source so the data is representative of a greater population and may better reflect national and/or regional trends. Stark guidance also indicates that using “multiple, objective, independently published salary surveys remains a prudent practice.” Additionally, consider the level of detail of the benchmark data in each survey, and adjust survey sources as your specific facts and circumstances warrant. For example, organizations should review benchmarks specific to physician practices when analyzing independent provider compensation.
- Trend and/or use a blend of multiple years of physician compensation and productivity survey data. Consider trending and/or creating a blend or weighted average of multiple years of survey data, including current metrics (i.e., 2021) and pre-COVID (i.e., 2019 and 2020) data. This will help inform your decision-making and ensure COVID-19 data is considered, but minimize the magnitude of the impact when warranted. This method may also help to curtail any potential impact of the 2021 MPFS in 2022 survey data, when available.
- Consider impacts of the current MPFS on physician compensation and productivity data. Many organizations have chosen to continue using the 2020 MPFS instead of transitioning to the 2021 or 2022 MPFS, as it was determined doing so would cause a negative financial impact on their organizations at a time when such losses were untenable and unsustainable. While this has provided immediate relief for some, hospitals will likely not be able to rely upon the 2020 MPFS indefinitely. As such, hospitals must consider their current compensation structures and whether a modification is necessary.
It is important to remember benchmark surveys are intended to provide directional guidance and should not be used as the single source of information for determining compliance and fair market value compensation. Additionally, 2021 benchmark surveys should not be dismissed, as they are a true representation of the recent healthcare industry’s challenges related to COVID-19. Most importantly, in our opinion, logic and context must be applied to the survey data to inform any decision-making. The same reasoning should be used with 2022 benchmark surveys as they are released in the coming months.
Unfortunately, no one can estimate when benchmark survey data will normalize once again. However, using one or more of PYA’s recommended strategies can help healthcare organizations continue to depend on benchmark surveys as reliable resources. As 2022 benchmark surveys are released, PYA will continue to monitor impacts on data and subsequent changes to physician compensation.
If you have questions or need assistance related to physician compensation, compensation valuation, or need additional COVID-19 guidance, visit PYA’s COVID-19 hub. One of our executive contacts would also be happy to assist. You may email them below or call (800) 270-9629.