Provider Compensation Management: Solving the Compensation Conundrum

Appropriately incentivizing your providers is imperative to drive strategy and alignment within your organization. But, what makes sense in theory, doesn’t always make sense in practicality. Regarding compensation management, the inconsistencies in data access and gaps between strategy and operations need to narrow significantly, if not be removed, for your team and organization to be successful and competitive in today’s market.Provider compensation strategy and automation technology can be your team’s bridge to success.

Why Automate Physician Compensation?

We often speak on the topic of physician compensation, with much of the focus on three key considerations: value-based healthcare, affordability, and scalability. Though each of these components warrants significant attention, we will focus here on the scalability piece. Recent statistics indicate that the healthcare industry has reached a tipping point where the number of employed physicians now outpaces the number of private practice physicians. This factor speaks to the dynamic of health systems growing their physician networks, and more physicians mean more compensation arrangements to manage. While the structural design of the compensation plan can play heavily into the ability to manage the model, this is not a one-stop solution. Meaning, even a perfectly designed model is often still adjudicated through complex spreadsheets subject to error and a significant workforce to administer and manage. As a 21st century solution to this problem, innovators are developing software technologies that will allow administrators to build and automate compensation models. Coker entered this paradigm through our affiliation with ProCARE Portal. This configurable rules engine takes the compensation plan adjudication from the raw data to the paycheck, with transparency in between. Further, it puts the tools in the hands of the healthcare organization to administer the backend of the model to allow maximum flexibility.While this industry is in its infancy, given the increasing complexity of compensation structures, coupled with the growth in the employed physician population, we see the technology as filling a tremendous need that will help address the scalability dynamics.

Provider Trust & Compensation Data Visibility

To trust the output and payments, providers need appropriate access to detailed data, compensation statements need to show transparency of calculation logic, and dashboards need to highlight opportunities for performance improvement. “If a physician payment is wrong, we would be the ones to have the conversation with the doctor. You know they appreciate that you brought it to them, but they also can’t help but question going forward, and they start to scrutinize. Maintaining trust and credibility is huge,” shared a Revenue Administrator with a US national health system. Manual processes and current ‘homegrown’ solutions fall short of providing this level of data access and transparency, increasing errors and reducing trust with providers.

The Broken Provider Compensation Management World

Many healthcare organizations follow a cumbersome and error-prone process, leaving administrators questioning the accuracy and triple-checking work. “Before ProCARE, we spent so much time manually updating our excel workbooks and reports constantly with every comp change and personnel change,” shares Judy Newman, Compensation Manager with a national specialty care network, “having ProCARE has been a game-changer for us.” Without compensation automation, this routine compensation management (e.g., data maintenance, compensation calculation and validation) is a heavily manual process that creates a significant burden on operations teams, thus preventing the implementation of optimal compensation strategies and accurate and timely compensation delivery. Simply streamlining models is not the answer; compensation models need to be scalable. However, over-simplistic and streamlined models fall short of valuing providers’ efforts and instead give way to poor relations, retention, and performance issues within your team. Hence, the compensation conundrum.

Unique & Complex Provider Compensation Models

There are several ways organizations may choose to compensate their providers.

  • Effective compensation models that drive desired results may include team-based incentives
  • Clawback and true-up logic
  • Fair market evaluation
  • Eligibility criteria
  • Pay cycles with minimal lag in arrears
  • Assessment of various operational, financial, and specialty-specific quality measures

Unfortunately, manual processes or simplified solutions are unable to manage complex models or exceptions. “For quarterly payers, we do not have a negative accrual concept, so each quarter it resets, even if they don’t make production for the month,” Kathleen Ward, Director of Revenue Analysis for Pathway Vet Alliance, shared with us. “Not having that visibility was a blind spot for us, so having it in a system like ProCARE that we can pull each month and see where a doctor stands is valuable.”

A Solution to Complex Provider Compensation Models

ProCARE can tackle the most complex models and variable arrangements that support an optimal and optimized compensation strategy. ProCARE Portal leverages proven concepts and architecture in incentive compensation management (ICM) technology. Keeping up with the ever-evolving provider compensation and value-based care models requires a system that can replicate and fully automate your current model yet provide a framework to accommodate easily any variable change, exceptions, and future models. “No matter what, I think any company is going to have some exceptions, and if your system can handle the exceptions to the rule, they won’t be quite as burdensome on your support staff. ProCARE’s system has allowed us to do this,” shares Kathleen. Organizations need one system that can handle all of the calculations and variable changes that do not require one-off processes and exceptions to be accommodated manually outside the system. With a robust provider compensation automation solution, you do not have to compromise how your strategic initiatives weigh into provider compensation.

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