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December 17, 2010

Survive the Holidays: Attracting Physicians and Reducing Costs

Every facility could use a little fine-tuning around the holidays to gear up for the fast approaching New Year.  With patient volumes down and greater limitations on patient growth, a key focus at acute care hospitals and related healthcare facilities is to save money.

In this edition of Off the Shelf, we take a look at Cost Reductions and Physician Compensation Strategies.

Cost Reductions

The dilemma for healthcare executives is how to achieve these cost reductions without major disruptions to operations?
On one hand, patients and medical staff generally think that hospitals are understaffed and new equipment is needed.  On the other hand, many have to face the fact that if you don't reduce costs, your days might be numbered with increasing financial pressure from your supervisor.

2010 was a year of many changes for healthcare organizations.  Here are some helpful tips:

  • Don't listen to nay-saying; staff is more open to change than you think
  • Surgeon preferences do not equate to a loss in patient volume
  • It's all about utilization (surgery, cath lab, radiology, etc.)
  • Don't single out one department or a grouping of departments; you are simply asking for trouble
Physician Compensation Strategies

Another area to consider around the holidays is your employed physician compensation model.  The  use of hospitalists to oversee the continuum of patient care has greatly expanded in recent years and while many hospitals have selected hospitalist companies to outsource these programs, many are choosing to manage these services themselves.  However, determining compensation and successfully tying it to outcomes can be challenging for hospitals, especially  if this is your first time employing physicians.

Healthcare facilities need to ensure that their physician employees are delievering on key factors for which they were hired.  Below are 4 approaches to consider:

1. Benchmarking

While a hospital could offer a physician a compensation level equivalent to a regional mean, many hospitals are now guaranteeing only a certain percentage of that mean and tying other compensation to performance indicators.

2. Tying Compensation to Performance

Tying compensation to performance is critical to the success of a hospitalist program.  While you cannot realistically tie compensation to all indicators, and you can't tie it to length of stay, tying it to certain core measures can really start to improve the quality of care patients receive.  Hospitals typically cap such bonus programs at about 5-10% of total compensation.

3. Utilization

Whether they are employed or a member of the medical staff, the drive is toward quality and efficiency.  The data is intended to help physicians understand how their outcomes and utilization differ from their peer group with the goal of reducing utilization while maintaining quality.

4. Review Contracts Against Performance

Finally, hospitals should include contract provisions that allow for periodic reviews of physician performance with specific measures.  Doing so allows compensation levels to be adjusted
accordingly, and allows hospitals to remove any physician that does not meet its criteria.

Be sure to check out Dollars & Sense, Soyring’s new biweekly web column with Executive Insight Magazine, which offers cost efficient/cost containment strategies and tips for healthcare leaders.

 Soyring's Solution

Contact Soyring Consulting for more information on reducing costs at your healthcare organization.

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