Hospital call pay: Turning a burden into a benefit

Hospital call pay: Turning a burden into a benefit

By: Kyle Worthy, Senior Consultant

Close up of plant growing up from crack in the asphalt road with copy space

Hospitals are struggling to survive. Financial challenges from shrinking reimbursements and skyrocketing expenses have pushed many facilities to the brink. The problem is especially dire in rural communities, where 5 percent of hospitals have closed since 2010, and another 21 percent are at high risk for closing. As a result, hospital administrators are looking for new ways to cut spending and improve profitability. Although it’s only one piece of the puzzle, one of the fastest-growing costs for many hospitals is physician call pay. Many hospital administrators see call pay as a zero-sum game, facing increasing pressure from physicians wanting to be paid, EMTALA requirements and the need to maintain service lines. While call pay may be unavoidable, it doesn’t have to be a financial killer. With the right solution in place, hospitals can actually recoup some of the cost. Here’s a closer look at the extent of the call pay issue, what it means for hospital culture and what administrators can do to remedy the situation.

Scope of the problem

It’s hard to overstate how untenable physician call pay has become for many hospitals. A 2014 Sullivan and Cotter survey found that between 2012 and 2014 alone, the average hospital’s call pay expenses increased 50 percent. According to the same study, those expenses actually rose a staggering 83 percent relative to net revenues. This dramatic rise has only continued in years since, and call pay now represents a substantial portion of total physician spend.

The physician shortage has only exacerbated these issues. In rural areas, some specialties are in such demand that hospitals and administrators will do just about anything they can to retain their services. This has led some hospitals to offer on-call contracts that go above fair market value and simply aren’t financially viable long-term.

How physicians view call pay

While it’s easy to view call pay as a strictly financial issue, it has broader implications that raise concerns about transparency, fairness and respect. Essentially, physicians tend to view call pay as a clear indicator of how much a hospital values them. The higher their call pay rate, the more valued they feel. Often hospitals will negotiate call pay rates with individual specialties based solely on fair market value.

But single-specialty negotiations create discord because of perceived divisions between the “haves” and “have nots.” In other words, when one specialty gets a higher call pay rate, people get jealous. This leads to distrust, disruptive rumors and ultimately higher physician turnover — another huge cost for hospitals. So when hospital administrators bend to a particular specialty’s demand for more call pay, they may actually be creating more problems than they solve.

Innovative solutions needed

Many hospitals have tried to solve the problem by adding to their call pay budgets but have found that this doesn’t resolve the issue. Administrators need a fresh approach that provides financial relief while addressing the underlying issues surrounding call pay. That’s where MaxWorth Consulting Group's innovative Call Pay Solution® comes in.

Composed of three unique phases, the Call Pay Solution® provides a path forward for both hospital administrators and physicians. It starts with the Physicians’ Call Committee, which brings together physicians from a wide range of specialties to negotiate call pay based on a common “fairness standard.” This helps alleviate many of the cultural problems caused by call pay inequalities. Next, the Physicians’ Advantage Plan uses a deferred compensation vehicle to reward physicians, allowing them to invest their call pay dollars pre-tax. This also benefits the hospital, giving them a tool for physician recruitment and retention. Finally, using common funding methods, hospitals may be able to offset and recoup some of the cost of call pay.

With this three-pronged approach, the MaxWorth Call Pay Solution® turns an unsustainable call pay expense into a powerful differentiator that can actually improve the financial strength of a hospital.

 

Want to learn how to reduce call pay expenses and improve your hospital’s bottom line? Read our whitepaper, Increasing hospital profitability: How to use creative solutions to curb physician spend.”

 

REQUEST OUR WHITE PAPER

Complete the form below and receive a copy of our latest white paper: Increasing Hospital Profitability
Something went wrong. Please check your entries and try again.

Want to Learn More?

Check out these additional resources for the Call Pay Solution®, our three-phase, six-step process that empowers your organization to create a more fair, transparent and sustainable call pay plan.

Call Pay Solution®

IS YOUR ON-CALL COMPENSATION PROGRAM SUSTAINABLE? LEARN MORE CONTACT US LEARN MORE CONTACT US The Call Pay Solution® On-call compensation issues involve two divergent perspectives: the medical staff’s and the hospital administration’s. Physicians perceive a justifiable need to be compensated fairly for the services they provide. Administrations face the challenge…

Physicians’ Advantage Plan™

Struggling To Align With Independent Physicians? We Can Help. LEARN MORE CONTACT US LEARN MORE CONTACT US The Physicians’ Advantage Plan™ In today’s regulatory environment, attracting, retaining and motivating physician talent is difficult and costly. Hospitals are challenged with the need to provided new physician benefits that are sustainable and…

Physicians’ Call Committee™

DO YOUR CALL PAY ARRANGEMENTS CREATE MORE DIVISION THAN ALIGNMENT? LEARN MORE CONTACT US LEARN MORE CONTACT US The Physicians’ Call Committee™ Call pay decisions are often made behind closed doors creating a lack of transparency that leads to division among medical staff and increases distrust of administration.   The…

Community Culture: A Top Physician Concern

By Kyle Worthy | August 13, 2019

Community Culture: A Top Chysician concern By: Leah Worthy A recent Jackson Physician Search survey polled rural physicians and administrators on the factors that influence recruitment. While both parties agreed that compensation is a top influencer, it was their differing opinions that revealed the more interesting insights. For example, administrators underestimated the importance of culture-related…

Building The Ideal Call Committee

By Kyle Worthy | July 24, 2019

Building The Ideal Call Committee By: Kyle Worthy A Physicians’ Call Committee can be a hospital’s inside track to success. The benefits of a committee extend beyond compensation. A committee can encourage physician alignment, enhance culture, and provide a platform for deeper engagement. But when a committee has not been structured properly, it tends to…

Case Study: Hospital CEO finds solution to call budget unpredictability

By Kyle Worthy | July 2, 2019

Case Study: Hospital CEO finds solution to call budget unpredictability By: Kyle Worthy Summary: Predictability in budgeting is everything. But for many hospital administrators, the rising cost of call pay and the constant possibility that yet more specialty groups will come forward asking for call pay makes setting a budget extremely difficult. But Bill Caldwell,…

maxworth_logo

Compensation Strategies to Attract, Retain and Reward Your Physician Talent.

OUR OFFICE

Charlotte, NC

877-643-7520

800-314-8281

info@maxworthconsulting.com

Office Hours:
M-F 8:00am – 5:00pm EST

Charlotte, NC
P:  877-643-7520
F:  800-314-8281
info@maxworthconsulting.com
M-F: 8AM - 5PM