1. As a starting point, use last year?s allocation of $600,000 for base salary and $120,000 for bonuses. What would be the total compensation of each physician if performance pay is based solely on a productivity measure, that is, 100 percent of performance pay based on patient visits (0 percent for all other productivity, financial, and quality measures), 100 percent based on work relative value units, or 100 percent based on professional procedures? Are the results consistent among measures?

2. Now focus exclusively on a financial performance measure: 100 percent of performance pay based on gross charges (0 percent for all other productivity, financial, and quality measures), 100 percent based on net collections, and 100 percent based on net income before physician compensation. Are the results consistent among the measures?

3. What if only a quality measure is used?that is, 100 percent of performance pay based on an average patient satisfaction score (0 percent for all other productivity, financial, and quality measures), 100 percent based on meeting a blood pressure control target, or 100 percent based on meeting a breast cancer screening target? Would the results be consistent among these measures?

4. One physician wants to base all compensation on performance. Assume that all of last year?s total compensation of $720,000 is allocated based on a single performance measure. What would be the total compensation of each physician based on each financial, productivity, and quality measure? Interpret the results.

CASE 11 11/28/2016 Copyright 2014 Health Administration Press Student Version ORLANDO FAMILY PHYSICIANS Pay for Performance This case requires the development of a physician compensation scheme for a four-physician family practice. The model uses historical data for inputs along with information regarding the amount of compensation to be based on performance and how that performance is measured. The model consists of a complete base case analysisno changes need to be made to the existing MODEL-GENERATED DATA section. However, some values in the student version INPUT DATA section have been replaced with zeros. Thus, students must determine the appropriate input values and enter them into the cells colored red. When this is done, any error cells will be corrected and the base case solution will appear. Note that the model does not contain any risk analyses, so students will have to create their own if required by the case. Furthermore, students must create their own graphics (charts) as needed to present their results. INPUT DATA: KEY OUTPUT: Physician Compensation Allocation: Physician Total Compensation: Base salary Performance pay $0 $0 $0 Physician Identifier B A Base salary $0 $0 $0 0 0 $0 0 0 0 0 0 0 0 0 0 0 0 $0 0 0 0 $0 $0 $0 Physician Performance Pay Allocation: Productivity Allocation: Patient visits Work RVUs Professional procedures Financial Performance Allocation: Gross charges Net collections Net income before physician comp Quality Allocation: Average patient satisfaction score Blood pressure control target met Breast cancer screen target met Total 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Productivity Performance Pay: Patient visits Work RVUs Professional procedures Financial Performance Pay: Gross charges Net collections Net income before physician comp Quality Performance Pay: Average patient satisfaction score Blood pressure control target met Breast cancer screen target met Total Performance Pay Physician Total Compensation MODEL-GENERATED DATA: Support Staff Data: Financial Data: Number Pay Gross charges $2,242,648 Practice manager 1 Receptionist 2 Nurses 4 Medical assistants 2 Billing clerk 2 Laboratory technician 1 Other costs Total support staff compensation $75,168 $48,652 $175,264 $52,615 $62,165 $46,788 $61,736 $522,388 Net collections Practice expenses: Support staff compensation Facilities costs Supplies cost Total practice expenses $1,747,059 $522,388 298,351 136,257 $956,996 Net income before physician comp Physician compensation: Base salaries Performance pay Total physician compensation $0 0 $0 Net income after physician comp Physician Data: Patient visits Work RVUs Professional procedures Gross charges Net collections Net income: Support staff allocation Facilities allocation Supplies allocation Net income before physician comp Average patient satisfaction score Blood pressure control target met Breast cancer screen target met A 4,023 4,667 6,255 $527,820 $422,256 Physician Identifier B C 3,567 3,966 5,055 5,475 6,972 7,287 $535,841 $602,675 $401,881 $421,872 D Total 4,244 15,800 4,967 20,164 6,742 27,256 $576,312 $2,242,648 $501,050 $1,747,059 $119,883 $74,588 $31,270 $196,515 89 Yes No $133,625 $74,588 $34,854 $158,814 80 Yes Yes $129,217 $74,588 $33,704 $263,541 94 No No $139,663 $74,588 $36,429 $171,193 87 Yes No $522,388 $298,351 $136,257 $790,063 350 Physician Performance Pay: A Physician Identifier B C D $790,063 Total Productivity pay: Patient visits Proportion of total Performance pay 4,023 25.5% $0 3,567 22.6% $0 3,966 25.1% $0 4,244 26.9% $0 15,800 100.0% $0 Work RVUs Proportion of total Performance pay 4,667 23.1% $0 5,055 25.1% $0 5,475 27.2% $0 4,967 24.6% $0 20,164 100.0% $0 Professional procedures Proportion of total Performance pay 6,255 22.9% $0 6,972 25.6% $0 7,287 26.7% $0 6,742 24.7% $0 27,256 100.0% $0 $790,063 Financial performance pay: Gross charges Proportion of total Performance pay $527,820 23.5% $0 $535,841 23.9% $0 $602,675 26.9% $0 $576,312 $2,242,648 25.7% 100.0% $0 $0 Net collections Proportion of total Performance pay $422,256 24.2% $0 $401,881 23.0% $0 $421,872 24.1% $0 $501,050 $1,747,059 28.7% 100.0% $0 $0 Net income before physician comp Proportion of total Performance pay $196,515 24.9% $0 $158,814 20.1% $0 $171,193 21.7% $0 $263,541 33.4% $0 $790,063 100.0% $0 Quality pay: Average patient satisfaction score Proportion of total Performance pay 89 25.4% $0 80 22.9% $0 87 24.9% $0 94 26.9% $0 350 100.0% $0 Blood pressure control target met* Proportion of total Performance pay 1 33.3% $0 1 33.3% $0 1 33.3% $0 0 0.0% $0 3 100.0% $0 Breast cancer screen target met* Proportion of total Performance pay 0 0.0% $0 1 100.0% $0 0 0.0% $0 0 0.0% $0 1 100.0% $0 * 1=Yes, 0=No Physician Identifier C D Total $0 $0 $0 $0 0 0 $0 0 0 $0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 $0 0 0 0 $0 0 0 0 $0 $0 $0 $0 CASE 11 Copyright 2014 Health Administration Press Student Version 10/4/2015 ORLANDO FAMILY PHYSICIANS Pay for Performance This case requires the development of a physician compensation scheme for a four-physician family practice. The model uses historical data for inputs along with information regarding the amount of compensation to be based on performance and how that performance is measured. The model consists of a complete base case analysisno changes need to be made to the existing MODEL-GENERATED DATA section. However, some values in the student version INPUT DATA section have been replaced with zeros. Thus, students must determine the appropriate input values and enter them into the cells colored red. When this is done, any error cells will be corrected and the base case solution will appear. Note that the model does not contain any risk analyses, so students will have to create their own if required by the case. Furthermore, students must create their own graphics (charts) as needed to present their results. INPUT DATA: Physician Compensation Allocation: Base salary Performance pay KEY OUTPUT: Physician Total Compensation: $0 $0 $0 B Physician Identifier C $0 $ 0 $0 $0 $0 $0 0 0 $ 0 0 0 $0 0 0 $0 0 0 $0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 A Base salary D Total Physician Performance Pay Allocation: Productivity Performance Pay: Productivity Allocation: Patient visits Work RVUs Professional procedures Financial Performance Allocation: Gross charges Net collections Net income before physician 0% 0% 0% 0% 0% 0% Patient visits Work RVUs Professional procedures Financial Performance Pay: Gross charges Net collections Net income before physician comp Quality Performance Pay: comp Quality Allocation: Average patient satisfaction score Blood pressure control target met Breast cancer screen target met Total Average patient satisfaction score 0 0 0 0 0 0% Blood pressure control target met 0 0 0 0 0 0% Breast cancer screen target met 0 0 0 0 $0 $0 $0 $0 $0 $0 Total Performance Pay $0 Physician Total Compensation 0% 0% 0 $ 0 $0 $ 0 MODEL-GENERATED DATA: Support Staff Data: Financial Data: Number Practice manager 1 Receptionist 2 Nurses 4 Medical assistants 2 Billing clerk 2 Laboratory technician 1 Other costs Total support staff compensation Pay $2,242,64 8 $1,747,05 9 Gross charges $75,168 $48,652 $175,264 $52,615 Net collections Practice expenses: Support staff compensation Facilities costs $62,165 $46,788 Supplies cost Total practice expenses $61,736 $522,388 $522,388 298,351 136,257 $956,996 Net income before physician comp $790,063 Physician compensation: Base salaries Performance pay Total physician compensation $0 0 $0 Net income after physician comp $790,063 Physician Data: Patient visits Work RVUs A 4,023 B 3,567 Physician Identifier C 3,966 4,667 5,055 5,475 D 4,244 Total 15,800 4,967 20,164 Professional procedures 6,255 6,972 7,287 6,742 Gross charges $527,820 $535,841 $602,675 $576,312 Net collections Net income: Support staff allocation Facilities allocation Supplies allocation Net income before physician comp Average patient satisfaction score Blood pressure control target met Breast cancer screen target met $422,256 $401,881 $421,872 $501,050 27,256 $2,242,64 8 $1,747,05 9 $119,883 $74,588 $31,270 $133,625 $74,588 $34,854 $139,663 $74,588 $36,429 $129,217 $74,588 $33,704 $522,388 $298,351 $136,257 $196,515 89 Yes No $158,814 80 Yes Yes $171,193 87 Yes No $263,541 94 No No $790,063 350 Physician Identifier C D Physician Performance Pay: A B Productivity pay: Patient visits Proportion of total Performance pay Total 4,023 25.5% $0 3,567 22.6% $0 3,966 25.1% $0 4,244 26.9% $0 15,800 100.0% $0 Work RVUs Proportion of total Performance pay 4,667 23.1% $0 5,055 25.1% $0 5,475 27.2% $0 4,967 24.6% $0 20,164 100.0% $0 Professional procedures Proportion of total Performance pay 6,255 22.9% $0 6,972 25.6% $0 7,287 26.7% $0 6,742 24.7% $0 27,256 100.0% $0 Gross charges Proportion of total Performance pay $527,820 23.5% $0 $535,841 23.9% $0 $602,675 26.9% $0 $576,312 25.7% $0 Net collections Proportion of total Performance pay Net income before physician $422,256 24.2% $0 $196,515 $401,881 23.0% $0 $158,814 $421,872 24.1% $0 $171,193 $501,050 28.7% $0 $263,541 Financial performance pay: $2,242,64 8 100.0% $0 $1,747,05 9 100.0% $0 $790,063 comp Proportion of total Performance pay Quality pay: Average patient satisfaction score Proportion of total Performance pay Blood pressure control target met* Proportion of total Performance pay Breast cancer screen target met* Proportion of total Performance pay * 1=Yes, 0=No 24.9% $0 20.1% $0 21.7% $0 33.4% $0 100.0% $0 89 25.4% $0 80 22.9% $0 87 24.9% $0 94 26.9% $0 350 100.0% $0 1 33.3% $0 1 33.3% $0 1 33.3% $0 0 0.0% $0 3 100.0% $0 0 0.0% $0 1 100.0% $0 0 0.0% $0 0 0.0% $0 1 100.0% $0 CASE 11 10/4/2015 Student Version Health Administration Press ORLANDO FAMILY PHYSICIANS Pay for Performance This case requires the development of a physician compensation scheme for a four-physician family practice. The model uses historical data for inputs along with information regarding the amount of compensation to be based on performance and how that performance is measured. The model consists of a complete base case analysisno changes need to be made to the existing MODEL-GENERATED DATA section. However, some values in the student version INPUT DATA section have been replaced with zeros. Thus, students must determine the appropriate input values and enter them into the cells colored red. When this is done, any error cells will be corrected and the base case solution will appear. Note that the model does not contain any risk analyses, so students will have to create their own if required by the case. Furthermore, students must create their own graphics (charts) as needed to present their results. INPUT DATA: KEY OUTPUT: Physician Compensation Allocation: Physician Total Compensation: Base salary Performance pay $0 $0 $0 Physician Identifier B C A Base salary D Total $0 $0 $0 $0 $0 $0 0 0 $0 0 0 $0 0 0 $0 0 0 $0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 $0 0 0 0 $0 0 0 0 $0 0 0 0 $0 0 0 0 $0 $0 $0 $0 $0 $0 Physician Performance Pay Allocation: Productivity Allocation: Patient visits Work RVUs Professional procedures Financial Performance Allocation: Gross charges Net collections Net income before physician comp Quality Allocation: Average patient satisfaction score Blood pressure control target met Breast cancer screen target met Total Productivity Performance Pay: Patient visits Work RVUs Professional procedures Financial Performance Pay: Gross charges Net collections Net income before physician comp Quality Performance Pay: Average patient satisfaction score Blood pressure control target met Breast cancer screen target met Total Performance Pay 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Physician Total Compensation MODEL-GENERATED DATA: Support Staff Data: Number Practice manager 1 Receptionist 2 Nurses 4 Medical assistants 2 Billing clerk 2 Laboratory technician 1 Other costs Total support staff compensation Financial Data: Pay $75,168 $48,652 $175,264 $52,615 $62,165 $46,788 $61,736 $522,388 Gross charges Net collections Practice expenses: Support staff compensation Facilities costs Supplies cost Total practice expenses Net income before physician comp Physician compensation: Base salaries Performance pay Total physician compensation Net income after physician comp Physician Data: Patient visits Work RVUs Professional procedures Gross charges Net collections Net income: Support staff allocation Facilities allocation Supplies allocation Net income before physician comp Average patient satisfaction score Blood pressure control target met Breast cancer screen target met A 4,023 4,667 6,255 $527,820 $422,256 Physician Identifier B C 3,567 3,966 5,055 5,475 6,972 7,287 $535,841 $602,675 $401,881 $421,872 D Total 4,244 15,800 4,967 20,164 6,742 27,256 $576,312 $2,242,648 $501,050 $1,747,059 $119,883 $74,588 $31,270 $196,515 89 Yes No $133,625 $74,588 $34,854 $158,814 80 Yes Yes $129,217 $74,588 $33,704 $263,541 94 No No $139,663 $74,588 $36,429 $171,193 87 Yes No $522,388 $298,351 $136,257 $790,063 350 Physician Performance Pay: A Physician Identifier B C D Total Productivity pay: Patient visits Proportion of total Performance pay 4,023 25.5% $0 3,567 22.6% $0 3,966 25.1% $0 4,244 26.9% $0 15,800 100.0% $0 Work RVUs Proportion of total Performance pay 4,667 23.1% $0 5,055 25.1% $0 5,475 27.2% $0 4,967 24.6% $0 20,164 100.0% $0 $2,242,648 $1,747,059 $522,388 298,351 136,257 $956,996 $790,063 $0 0 $0 $790,063 Professional procedures Proportion of total Performance pay 6,255 22.9% $0 6,972 25.6% $0 7,287 26.7% $0 $527,820 23.5% $0 $535,841 23.9% $0 $602,675 26.9% $0 $576,312 $2,242,648 25.7% 100.0% $0 $0 Net collections Proportion of total Performance pay $422,256 24.2% $0 $401,881 23.0% $0 $421,872 24.1% $0 $501,050 $1,747,059 28.7% 100.0% $0 $0 Net income before physician comp Proportion of total Performance pay $196,515 24.9% $0 $158,814 20.1% $0 $171,193 21.7% $0 $263,541 33.4% $0 $790,063 100.0% $0 Quality pay: Average patient satisfaction score Proportion of total Performance pay 89 25.4% $0 80 22.9% $0 87 24.9% $0 94 26.9% $0 350 100.0% $0 Blood pressure control target met* Proportion of total Performance pay 1 33.3% $0 1 33.3% $0 1 33.3% $0 0 0.0% $0 3 100.0% $0 Breast cancer screen target met* Proportion of total Performance pay 0 0.0% $0 1 100.0% $0 0 0.0% $0 0 0.0% $0 1 100.0% $0 Financial performance pay: Gross charges Proportion of total Performance pay * 1=Yes, 0=No 6,742 24.7% $0 27,256 100.0% $0