Are your APPs on compensation structures similar to physicians? There’s good reason to move in that direction: Where APPs impact patient outcomes, they impact reimbursement revenue, quality rankings, and more. It makes sense to incentivize them with value-based compensation structures.
When speaking with organizations using flat APP salaries, we often hear uncertainty that the shift is worth the effort. The answer is yes, it absolutely is. Having APPs on value-based pay structures will help to:
1. Soften the blow of the physician shortage
The U.S. is facing a shortfall of up to 124,000 physicians by 2034. Demand will surge as the population grows by 35 million with a projected 42% increase among the 65+ group. Employment growth for physician assistants, nurse practitioners and similar providers is projected to grow 31-45%, so APPs can help navigate the shortage by seeing lower acuity, less complex patients.
2. Manage performance and reduce risk related to quality
Whether or not APP compensation is tied to performance, their performance is tied to your organization’s reputation and profitability. If APPs are not incentivized in the same manner as physicians, the enterprise is exposed to significant risk. By ensuring APPs feel invested in patient outcomes, you can more comfortably rely on them to fill gaps in care.
3. Meet productivity goals
Without tracking APP performance, you might miss significant productivity issues. From work relative value units (WRVUs) to panels and other patient-population measures, the team could fall short of its targets if APP production is below average. Having the right tracking tools helps ensure physicians are optimally utilizing APPs.
4. Reduce the overall cost of care
The overall funding pool should remain neutral under value-based compensation, meaning the transition is not necessarily a change in dollars paid out, just how it’s structured. By holding more people accountable for quality of care, organizations can provide a low-cost alternative for routine care, increasing capacity and making physicians more efficient.
Two critical pieces are needed: smart technology and smart strategy
You can’t pay on what you can’t measure. To manage performance-based incentives and drive continuous improvement, you need the ability to capture, track, and analyze key metrics. Without the right technology, the complexity of compensation will undermine any effort.
Where different pay elements reside in disparate sources, the approach is prone to error, delays, and confusion. A consolidated platform that captures and presents all relevant information is crucial – and so is the ability to share the benefits by modeling the new plan against the existing one. The latter requires transparency, leveraging technology to ensure this “new normal” is communicated, measured, and adjudicated.
To be effective, the transition needs to be handled strategically through careful planning, balancing the current structure, and preparing and appropriately incentivizing all providers to function well as a team.
Assess how APPs are used now to inform a standardized process that ensures they’re used effectively going forward. Physician behavior and incentives will also need to change – alleviate concerns by adding incentives around organizational and financial sustainability, patient and panel management, expense management, and other criteria that reduce focus on WRVUs.
Once the APP and physician roles have been clarified, craft an implementation timeline. Meet individually with APPs and collaboratively develop value-based performance criteria and benchmarks. To generate buy-in, consider a multi-year rollout:
Year 1: Track the proposed measures, creating a shadow model to identify changes at individual physician and APP levels.
Year 2: Phase in the identified, tracked components.
Year 3: Achieve full implementation for physicians and APPs.
The bottom line is this: Regardless of how APPs are compensated, you need to start monitoring their quality performance because they are affecting overall revenue. The only question is, when your organization does choose to transition to a value-based approach to APP compensation, will you be prepared?
About the Author: Dave Butcher is Chief Growth Officer – Heisenberg II at Hallmark Health Care Solutions, where he leads sales and business development for the Heisenberg II solutions. As an expert in client acquisitions and relationship management, business process improvement, and strategy, Dave helps hospitals and medical groups achieve accuracy, compliance, and transparency throughout compensation administration. Special thanks to Amy Strauss, Senior Manager, ECG Management Consultants, for contributing to this article.
About Hallmark Health Care Solutions:
Hallmark Health Care Solutions, Inc. (HHCS) is a healthcare technology firm led and managed by industry experts in IT, nursing, process engineering, finance, and healthcare. HHCS is ranked No. 318 on the 2021 Inc. 5000 List of Fastest Growing Private Companies in the U.S. With solutions in use by more than 50,000 healthcare professionals in more than 1,500 healthcare facilities in all 50 states, HHCS delivers hundreds of millions of dollars in cost savings and revenue gains to its clients. HHCS’ workforce solutions include Heisenberg II, a physician compensation and contract management solution, and Einstein II, a workforce deployment and vendor management solution. HHCS is a proud sponsor of AAPCP. For more information, visit hallmarkhcs.com.
