The rising cost of call pay can be unsustainable, even for large health systems

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The rising cost of call pay is well documented. According to a 2014 Sullivan Cotter survey, the average hospital’s call pay expense rose 50% from 2012-2014, and it has continued to rise in the years since. Many have turned to physician employment as a solution, but as we discussed in a previous post, this is not always the best option, and for many organizations, it’s financially unfeasible. 

 

A universal problem

 

We’ve long believed that this problem will continue to be universal, affecting all types of hospitals from rural nonprofits to larger health systems. Last week, this belief was confirmed when we were contacted by a newly hired system first vice president of a large health system. 

 

When the executive arrived at corporate headquarters this spring, he immediately received a report from corporate finance concerning the escalation of their call pay expenditures. His new system’s spend rate per facility and annual increases were greater than the national average, having steadily risen at a rate of 4.5% a year for over a decade. He realized that this expense was simply unsustainable. 

 

The Call Pay Solution

 

Having worked with MaxWorth during his previous tenure, he recalled how our Call Pay Solution enabled his organization to control costs and recover a portion of their call pay expense. He had seen first hand how the program aligned the medical staff by transforming the culture of call pay and eliminating agitation around the topic. 

 

By employing MaxWorth’s process, his organization will be able to turn a financial liability into a powerful asset. According to the 2014 Sullivan and Cotter survey, the average call pay expense had increased 83 percent relative to net revenues since 2012. Over the same time period, our clients experienced only a 4.54 percent increase. 

 

Financial impact

 

Our process not only ensures the sustainability of a hospital’s call pay program with cost containment and expense recovery vehicles, it also improves recruitment and retention by offering physicians more valuable rewards. Improvements in these areas have a significant financial impact on operating margins, which often offsets the cost of the program. 

 

As the cost of call pay rises, this threat will continue to affect community hospitals and large health systems alike. Since employment has come up short in solving the issue, it’s clear that a more creative approach is needed. We hope that our Call Pay Solution can be an arrow in the quiver for executives looking to reward physicians in a meaningful way while controlling the cost escalation associated with call pay.

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