Physician Production and Compensation: RVUs and other Productivity Measures

Physician productivity is one of the most common metrics used by practice owners, whether independent or part of a larger system, to determine physician compensation. Measures of productivity often include one or more of the following statistics, several of which are based on the RVU system:

  • Number of RVUs performed (total RVUs; or “work only” RVUs)
  • Number of patient visits,  encounters, or procedures performed (inpatient or ambulatory)
  • Number of ancillary services provided
  • Number of hours worked
  • Total charges

The Medical Group Management Association (MGMA) produces an annual report called “Physician Compensation and Productivity Survey.” Data is categorized in this report by specialty and can be used as a starting point for benchmarking using a variety of measures.

Based on the information provided in "Relative Value Units: Part 1" and the information above, we can take a look at a basic example.

An Example

Dr. Smith is a nephrologist whose hospital system uses RVUs for its productivity-based compensation system within the related practices. There are three physicians in the practice, each of whom receives a base salary of $175,000 per year plus bonuses based on productivity. The productivity portion of the compensation formula includes payment of $34 for each RVU performed by the physician. Internally it was noted that Dr. Smith produced a low number of RVUs as compared with benchmarks from the Medical Group Management Association (see below for benchmarks) and his peers but yet his schedule was packed. Dr. Smith felt extremely busy and didn’t understand how his productivity wasn’t in-line with the benchmarks.   

Physician Work RVUs*

  Mean 25th Percentile Median 75th Percentile 90th Percentile
Nephrology 6,830 5,015 5,996 8,307 11,284

*Courtesy of the Medical Group Management Association. Physician Compensation and Production Report, 2010 report based on 2009 data.

As the numbers were further analyzed, it was noted that Dr. Smith did see an equivalent number of patients to his peers, so his practice decided to take a different approach and have a coding and documentation audit performed by an independent consultant. The audit results showed that Dr. Smith was utilizing level 3 evaluation and management codes much more frequently than the other physicians in the practice. A review of his documentation showed that Dr. Smith could actually have coded many more encounters at a higher level. He admitted he routinely coded “conservatively” for fear of being audited. The other two physicians in the practice were using higher level codes more frequently as they felt more comfortable with the coding rules.

Dr. Smith was provided with education on RVU assignment, documentation, and coding. As a result, his RVU level increased by 38%, bringing his salary much more in line with the other physicians in the practice. The chart below shows compensation levels of the physicians both pre- and post-audit.

Compensation Model Pre-Audit and Education

Physician Base RVUs RVU Value RVU Bonus Total Yearly Compensation
Dr. Jones $175,000 6,000 $34 $204,000 $379,000
Dr. Jackson $175,000 5,500 $34 $187,000 $362,000
Dr. Smith $175,000 3,100 $34 $105,400 $280,400

Compensation Model Post-Audit and Education

Physician Base RVUs RVU Value RVU Bonus Total Yearly Compensation
Dr. Jones $175,000 6,000 $34 $204,000 $379,000
Dr. Jackson $175,000 5,500 $34 $187,000 $362,000
Dr. Smith $175,000 4,995 $34 $169,830 $344,830
As mentioned, this is a very simplistic example using only RVUs but a realistic one nonetheless. The analysis turned out to be a very positive exercise. Dr. Smith didn’t need to work harder but only code better based on the work he was already doing to be compensated fairly.

RVUs, however, are not the only system used to measure or compensate productivity. There are many ways to look at productivity in a practice. In future articles we will look at both financial and non-financial components or measures that can be used in developing a compensation system.

If you have a productivity measure or benchmark that you would like to know more about, please let us know by posting a comment or emailing us at stat@pamedsoc.org and we may focus one of our future articles on your specific topic.

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