Extenders can get paid in different ways

A column about keeping your practice in good health

By Mike Norbutcovered practice management issues during 2002-06. Posted Oct. 24, 2005.

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There are two prevailing theories about how to structure a compensation plan for your physician extenders.

Some groups employ their nurse practitioners and physician assistants on a straight salary arrangement, in which they earn the same amount regardless of how many patients they see.

Other groups, meanwhile, use a compensation plan that offers a base salary with a bonus incentive based on a productivity benchmark. While it's not a straight productivity-based system in the way that most physicians structure their salaries, it offers a reward for those physician extenders who are more efficient.

There are pros and cons to each approach, of course, so the choice for your group ultimately comes down to your practice environment and your comfort level.

For example, Diane Noton, MD, a family physician in Saratoga, Wyo., employs two physician assistants on a straight salary basis.

Because Dr. Noton's practice is located in such a remote location -- the nearest hospital is 40 miles away -- the clinic serves as the medical support system for a finite set of patients. While the practice is busy enough to allow her to hire another physician, adding two physician assistants for a comparable cost allows her to have more resources for on-call duty, Dr. Noton said.

However, the practice isn't so busy that efficiency is a chief concern. Promoting productivity incentives when the schedule doesn't necessarily require speedy visits could alter the culture of her practice, Dr. Noton said.

"I don't want to create a sense of competition among them," she said. "I would consider it if we always filled up our schedule."

There are plenty of dangers associated with providing productivity-based incentives, said Terry Brauer, CEO of HealthCare Management Consultants Inc., based in Portland, Ore. By giving a clinical professional -- whether a physician or physician extender -- a bonus for working quickly, there's always the chance quality of care may suffer as a result, he said.

Or, if your practice pays a bonus based on exceeding a certain financial benchmark, unnecessary tests may be ordered as a way to maximize the financial output of each patient visit, he said.

"Incentivizing financial performance based on gross dollars is not the best way to incentivize any staff," Brauer said.

A group can address those concerns by promoting efficiency and quality together. Nova Medical and Urgent Care Center Inc., a primary care-based system of clinics based in Ashburn, Va., audits its charts regularly to make sure its physician extenders are giving quality care.

The group, which employs 15 nurse practitioners and one part-time physician assistant, offers a quarterly productivity bonus on top of a base salary. Once the physician extender reaches a target benchmark for charges in the time period, he or she earns a percentage of the excess revenues, said Grace L. Keenan, MD, an internist and founder of the group.

The group installed the system about three years ago and saw immediate results in terms of productivity, Dr. Keenan said. Not only did it encourage the physician extenders to pay closer attention to accurate coding, but it also "dangled a carrot," giving them a reason to work harder, Dr. Keenan said.

"It stopped the grumbling when someone wanted to be seen five minutes before [the office was set to close]," Dr. Keenan said. "They knew there was something in it for them."

A group that offers a productivity bonus will have a better feeling if its nurse practitioners and physician assistants are working as hard as they can, said Cary Edgar, a principal with Ancillary Care Solutions LLC, based in Scottsdale, Ariz.

If everyone is earning the same salary, they don't necessarily have the incentive to work harder, he said. By adding a productivity bonus, you suddenly add a perk that makes it worth it to "see that extra patient or stay half an hour later on some days," he said.

As opposed to groups that only offer Christmas bonuses based on a subjective rating system, judging a physician extender based on productivity allows for an objective, transparent evaluation system, Edgar said. "People can have widely different productivity levels, and basically, you're recognizing that," he said.

"You're essentially saying, 'We're going to treat you like a doctor. The more we collect, the more we will share with people.'"

Setting productivity goals too high, however, can be detrimental as well. If no physician extenders are reaching their benchmarks, they might become discouraged, consultants said.

"If you're going to have a bonus, it has to be realistic," Dr. Keenan said.

Mike Norbut covered practice management issues during 2002-06.

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