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Private practice to RVU question

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  • Private practice to RVU question

    Hello! I'm currently in private practice and considering moving to hospital employment with payment based on wRVU's. I like the idea of not having to do anything besides practice medicine, but I also want to see if this move financially makes sense. I've never been paid with wRVU's before so I'm trying to understand how to compare the offer to what I'm currently making.

    I was offered Salary X + $rate/wRVU for wRVU's generated above a certain threshold. Salary X is less than what I'm currently bringing in. But I'm presuming the $rate/wRVU will make up for that. I'm told the $rate/wRVU is standard for my specialty.

    I took my top 10 most frequently used codes for the past year in private practice, looked up their wRVU equivalent, and added up how many wRVU's I generated this past year based on the codes I used most often. I took the amount I took home in private practice (collections minus overhead) and divided that by the number of wRVU's to get an idea of what wRVU rate I'm currently working at. That rate is a good $15/RVU higher than what I'm being offered at the hospital. In addition, the amount of wRVU's I generated is less than their threshold for bonus. This makes me think that from a financial standpoint, perhaps I should stay in private practice. Is there anything I'm not taking into consideration here?

    Thanks in advance.

  • #2
    What specialty?
    office or procedural?
    Are you changing regions?
    Are you keeping your panel or going to start over?
    Is there anyone who is already doing the job that you can compare with?
    What benefits come with the new job that are of value to you?

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    • #3
      In order for the hospital to stay in business, you are going to make less in salary and bonus then what you previously would have generated in private practice. The rvu model is nice because you can ignore your patients insurance reimbursement rate, but the hospital obviously has to pay attention to that and calculate a collection rate minus a much larger overhead that includes multiple administrators, the hospital CEO, administrative assistants, hospital security, IT department, etc that need to be paid from the organization by taking a cut or percentage of everybody's revenue. They also do not want to risk having to pay you more then you generate because they cannot afford to lose money on every employee. The only time that it makes sense for the hospital to pay you equivalent or more then what you are generating in revenue is when you work for one of the specialties that that pays more based upon supply demand like hospitalist (who end up saving the hospital money via being more efficient then primary care doctors who admit their own patients) or ER, or some specialty that the hospital needs to generate revenue for the other programs and cannot obtain without paying more then a private practice market rate. The benefits of being an employed physician is that you don't have to worry as much about competition from some other small private practice group because the hospital is supposed to be generating your referral base and you don't have to deal with the business aspects of medicine. The disadvantages are the loss of autonomy where you have to answer to some business manager that knows nothing about medicine and the loss of income due to the high overhead that you are covering. Some specialties are better suited for hospital employment then others.

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      • #4
        Your denominator is too small. You only used top 10 codes. You need to use all and multiply the codes by the number of times you used each and by the wRVU for each. Further, only RVUs in excess of their threshold matter. If you still aren’t above their threshold then you’re not missing anything. This is how hospitals profit off physicians. And to make matters worse, their negotiated RVU rates are likely better than yours plus they get paid via the OPPS and you don’t. Hospitals are where value goes to die for standard things.

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        • #5
          The other way to find out the wrvus is to take a standard month and look at all your cpt codes and convert that month to wrvus and extrapolate.

          Life is not necessarily easier at a hospital based practice. Sometimes hospitals just hire people because they think they need an x y or z physician and don’t have a real healthy referral base or plan set up. If you are someone who likes a super professional environment, the new manager over your life may not consider that critical. They may only care about encounter numbers. Plus you still have meetings and other annoyances. Lastly, hospitals have to treat everyone including non-payers. It’s good to help everybody but it means the hospital system might have less money. Private practices don’t have to take those patients and considering the hospital payer mix will be critical.

          The bonus threshold is key. Many times the larger systems will pay a lower tier conversion factor/$ per wrvu for average effort and make you work harder to claw back the lost dollars per wrvu. So, if you generate the 75th percentile of effort you will catch up to a fair compensation.

          Hospitals employment can be better with higher quality of management, quality of life, and better benefits but you really need to drill down deep because that is not necessarily true. Once you figure out the compensation, you will want to talk to the MAs, front office people, and other physicians to get the real story. Often your loss of 10-15% of your old income can be picked up with volume.

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