Are you relying on benchmark tables to set your physicians’ pay? If so, I’d urge you to think twice.
Benchmarks can be helpful. They can give you a sense of the market rates for physician compensation. They can help you determine what is fair market value.
But they can also cause big problems.
Take this real-world example, based on an experience I had with a hospital-affiliated practice in the Midwest, who paid their very productive neurosurgeons by multiplying the current national median benchmark compensation per WRVU rate by the physicians’ personally performed WRVUs.
One year, the benchmark rate unexpectedly jumped from about $83.50/WRVU to about $89.00/WRVU. One of the practice’s neurosurgeons, who had logged 13,000 WRVUs in the prior year, was suddenly on track to make $70,000 more for the same amount of work.
Had the market for neurosurgeons really changed that much in such a short time? Probably not.
And now, the practice had a difficult choice. They could either absorb a huge increase, even as reimbursement trended down and other expenses trended up, or they could say, “Sorry Doc, but we can’t keep the promise we made you.” Afraid of losing their prized surgeon, they paid the extra $70K, as promised. Most private practices I know wouldn’t have been able to make the same choice.
The opposite can happen, too, when benchmarks go down. Physicians get upset and you’re left trying to explain something you didn’t cause.
It’s not just the dollars that are at risk. These swings can erode trust and morale. And when physicians feel undervalued or blindsided, they disengage—or leave.
So what’s the alternative?
Benchmarks should be just one input, not the only input. You also need to consider:
- Your organization’s financial situation
- Historical compensation patterns
- Internal equity
- Strategic priorities
- Signals from your actual market
Some of the most thoughtful practices I’ve worked with do this kind of holistic review every year. It’s more work up front, but it leads to better decisions and better alignment between physicians and practice leadership.
Have a great day,
Stu Schaff, The Best Practice
P.S. If you’re interested in hearing more about this, you can listen to a recent interview I did on The Healthcare Compliance Pod. Here’s the link: https://www.dentonshealthlaw.com/dont-make-this-mistake-when-using-physician-compensation-benchmarks-episode-65/
