When discussing physician compensation, including compensation related to physician obligations of supervision of non-physician practitioners (NPPs) such as nurse practitioners and physician assistants, it is important to consider how employers receive money for services. They are paid either by volume or value. Although value-based reimbursements are growing for many specialties, fee-for-service (volume) remains the primary way an employer is compensated for billed services. On the surface, the math problem for an employer is very simple:
VOLUME + VALUE – COMPENSATION = PROFITABILITY
Ultimately, the employer’s macro-level compensation plans simply seek to maximize profitability for the physicians and NPPs it provides compensation to. They benefit from the supervision a physician can and, in most states, must provide to NPPs.
In short, physician supervision is VERY profitable to employers. Please do not sell it to them for free.
Physician Compensation for Supervision
If you follow my blogs and Instagram, you probably already know that I do not like these compensation arrangements for most physicians. They are often very employer-friendly and do not fairly compensate the physician for time, energy, and risk that comes with supervision obligations. They often compensate physicians less per unit of time or energy than if the physician simply applied that time and energy to pursuing a productivity based bonus, value based incentives, increased FTE, an extra shift, or simply explored moonlighting opportunities. Importantly, supervision adds obligations to your plate which is likely already full! The ‘overtime’ work you perform, including supervision, should be at a premium and not a discount. Before you agree to supervision responsibilities, consider how much compensation you will receive for this work compared to how onerous the obligation will be.
However, if you find yourself required or inclined to explore compensation for supervision obligations, here are some options.
No Compensation for Supervision: “We already pay you to do whatever we want, so just do more.”
Employers really don’t want to compensate you for your time and energy to supervise NPPs. Administrators, often MBAs or Masters-level business executives, see a huge opportunity to improve profitability. Your employer may believe their base compensation offer is already compensating you for supervising NPPs, particularly if you are on a base compensation model with no/minimal productivity bonus and/or no/minimal quality incentive.
Make sure you clarify your supervision responsibilities in your first contract under the Physician Duties/Responsibilities section or in another section. You should consider negotiating to exclude supervision from your employment obligations. If they are unwilling to budge, please note that this employer is likely to require that you do this for free and unilaterally increase your work obligations over time.
Hourly Compensation for Supervision
Employers may offer to allow you to record your time spent supervising and pay you on an hourly basis. However, if you look closely, the hourly rate they are willing to pay is often lower than what you make per hour already, such that adding more time to your day would result in a diminished marginal rate of compensation. Said another way, if your first 40 hours (likely more) of work in a week pays you $175/hr., and the hourly rate for supervision your employer offers to pay is $150/hr., then it is not in your best financial interests to do agree to do more work. If you wanted to earn more compensation, you would likely be better off focusing your time and energy elsewhere.
Also, I am hearing from some physicians that employers do not want to pay for hours spent supervising during the workday. For example, the employer may argue that the physician is already compensated for time spent supervising during normal patient contact hours and argue they are not responsible for paying twice for that work. They may refer to it as ‘stacking’ and may believe it raises Stark Law concerns (it likely does not). Physicians also share with me that proper supervision often happens in small chunks sprinkled throughout the day, particularly for newer NPPs. It is not always practical to have supervision scheduled in a particular blocked time each day. As such, if the employer only wants to compensate you hourly and only outside of your normal workday, this compensation method is unlikely to be good for you.
Flat Fee Stipend for Supervision
This supervision compensation method recognizes that a physician’s supervision obligation may be variable or not always calculable solely on time, and provides a set compensation amount per month per NPP. The physician should make sure it is high enough to compensate them more, not less, than utilizing that time to simply produce more wRVUs. The physician may be motivated to incentivize and support NPPs who they believe provide lower malpractice risks to them, and conversely will work to push out those who do not. This may also be better for employers as more contracts move to value-based models. Finally, I would encourage physicians to negotiate their contracts to include more power to hire and fire those they are responsible for supervising.
Unfortunately, I am finding that employer expectations on how much of a set monthly stipend is appropriate is unfairly low.
NPP productivity is often calculated in the same way as physicians with wRVUs. I have seen supervision compensation models that provide compensation to the supervising physician calculated by the productivity of those they supervise. However, the devil is in the details of each arrangement. I suspect the modified wRVU will, in practice, often look very similar to a supervisory stipend and end up being about the same amount. The analysis for the stipend model will likely be similar to the modified wRVU model. I understand that productivity among NPPs is often significantly lower than physicians and not that variable. From a behavioral perspective, as a physician you may not want your compensation tied to the productivity of NPPs. Being incentivized to encourage them to perform more work may lead to undesired outcomes.
Profitability of Business Unit
Physicians in certain specialties may have profitability compensation models such that their compensation is calculated by collections (or production) minus expenses. In this model, the physician is essentially running their own small business unit and are responsible for making their small business profitable. One expense may be an NPP. Here, if the NPP increases the profitability of the business unit in a way that is favorable to the physician, then it makes sense for the physician to hire and employ them. Whether this arrangement makes sense for you is very specialty specific and situation specific.
Whatever You Decide, Don’t Do It for Free!
The worst option here is clearly to do it for free. Too many physicians do this for free. What may start as supervising one may easily turn into a few or several, and you may end up with more uncompensated supervision obligations than you anticipated. If this is you now, consider renegotiating your contract or exploring other employment options. I would consider evaluating your contract for Leverage and Exit options and how you may use this to renegotiate.
Among the other supervision compensation options, it is often best for you to negotiate out of supervision obligations. Instead, spend that time pursuing more wRVUs, value metrics, higher FTE, more shifts, or moonlighting (or just chill out). If this is not an option, I prefer the supervisory stipend over the hourly rate method because it is likely to give the physician a little more control over the arrangement and may lead to more compensation in some circumstances (probably not). I have seen very few modified productivity methods that are easily calculated and appear favorable to the physician, but each arrangement is a little different.
Do you have a supervision compensation model that is different than the options discussed here? If so, I would love to chat with you.