Bangor Family Practice
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copy_of_copy_of_a6.2_bangorcase.xlsCase 11
| CASE 11 | Instructor Version | Copyright 2006 | |||||||||||
| 8/3/05 | by FACHE | ||||||||||||
| BANGOR FAMILY PHYSICIANS | |||||||||||||
| Pay for Performance | |||||||||||||
| This case requires the development of a physician compensation scheme for a four-physician family | |||||||||||||
| practice. The model uses historical data for inputs along with information regarding the amount and | |||||||||||||
| type of compensation to be based on performance and how performance is measured. | |||||||||||||
| The model consists of a complete "base case" analysis--no changes need to be made to the existing | |||||||||||||
| MODEL-GENERATED DATA section. However, some values in the student version INPUT DATA | |||||||||||||
| section have been replaced with zeros. Thus, students must determine the appropriate input value and | |||||||||||||
| enter them into the cells colored red. When this is done, any error cells will be corrected and the | |||||||||||||
| base case solution will appear. Note that the model does not contain any risk analyses, so students | |||||||||||||
| will have to create their own if required by the case. Furthermore, students must create their own | |||||||||||||
| graphics (charts) as needed to present their results. | |||||||||||||
| INPUT DATA: | KEY OUTPUT: | ||||||||||||
| Compensation System Parameters: | Physician Compensation: | ||||||||||||
| Total amount in base pay | $300,000 | Based On | A | B | C | D | Total | ||||||
| Total amount in performance plan | 300,000 | Net revenue | $177,509 | $174,010 | $177,443 | $191,039 | $720,000 | ||||||
| Total amount in profit distribution | 120,000 | Work RVUs | 4,667 | 174,436 | 180,208 | 186,457 | 178,899 | 720,000 | |||||
| $720,000 | Net income | 6,255 | 179,620 | 165,304 | 170,005 | 205,071 | 720,000 | ||||||
| Multiple Factor Distribution: | Mult. factors* | 180,929 | 192,865 | 174,817 | 171,388 | 720,000 | |||||||
| Percentage based on financial performance | 50% | ||||||||||||
| Percentage based on noneconomic factors | 50% | *Multiple factors plan includes non-economic factors plus work RVUs | |||||||||||
| 100% | |||||||||||||
| Historical Physician Data: | |||||||||||||
| Physician Identifier | |||||||||||||
| A | B | C | D | Total | |||||||||
| # Patients | 4,023 | 3,567 | 3,966 | 4,244 | 15,800 | ||||||||
| # RVUs | 4,667 | 5,055 | 5,475 | 4,967 | 20,164 | ||||||||
| Professional procedures | 6,255 | 6,972 | 7,287 | 6,742 | 27,256 | ||||||||
| Gross charges | $527,820 | $535,841 | $602,675 | $576,312 | $2,242,648 | ||||||||
| Net collections | $422,256 | $401,881 | $421,872 | $501,050 | $1,747,059 | ||||||||
| Total support staff cost | $522,388 | ||||||||||||
| Total facilities costs | $298,351 | ||||||||||||
| Total supplies cost | $136,257 | ||||||||||||
| Revenue reinvested in practice | $78,892 | ||||||||||||
| Physician base compensation | $600,000 | ||||||||||||
| Historical Support Staff Data: | |||||||||||||
| Number of Employees | Total Compensation | ||||||||||||
| Practice Manager | 1 | $75,168 | |||||||||||
| Receptionist | 2 | 48,652 | |||||||||||
| Nurses | 4 | 175,264 | |||||||||||
| Medical assistants | 2 | 52,615 | |||||||||||
| Billing clerk | 2 | 62,165 | |||||||||||
| Laboratory technician | 1 | 46,788 | |||||||||||
| Other costs | 61,736 | ||||||||||||
| Total | $522,388 | ||||||||||||
| Non-Economic Data: | |||||||||||||
| A | B | C | D | Total | |||||||||
| Average patient satisfaction score | 91 | 93 | 90 | 87 | 361 | ||||||||
| Number of committee meetings | 12 | 16 | 8 | 4 | 40 | ||||||||
| Continuing education credits | 15 | 12 | 10 | 18 | 55 | ||||||||
| Professional assn. leadership | 1 | 2 | 0 | 0 | 3 | ||||||||
| 182 | 221 | 128 | 130 | 661 | |||||||||
| MODEL-GENERATED DATA: | |||||||||||||
| Compensation Based on Net Collections (Revenue) | |||||||||||||
| Physician Identifier | |||||||||||||
| A | B | C | D | Total | |||||||||
| Net collections | $422,256 | $401,881 | $421,872 | $501,050 | $1,747,059 | ||||||||
| Proportion of revenues | 24.2% | 23.0% | 24.1% | 28.7% | 100.0% | ||||||||
| Performance compensation | $72,509 | $69,010 | $0 | $72,443 | $0 | $86,039 | $300,000 | Total should equal $300,000 | |||||
| Base pay | 75,000 | 75,000 | 75,000 | 75,000 | 75,000 | 75,000 | 300,000 | Total should equal $300,000 | |||||
| Profit distribution | 30,000 | 30,000 | 30,000 | 30,000 | 30,000 | 30,000 | 120,000 | Total should equal $120,000 | |||||
| Total compensation | $177,509 | $174,010 | $177,443 | $191,039 | $720,000 | Total should equal $720,000 | |||||||
| Compensation Based on Work RVUs | |||||||||||||
| Work RVUs | 4,667 | 5,055 | 5,475 | 4,967 | 20,164 | ||||||||
| Proportion of revenues | 23.1% | 25.1% | 27.2% | 24.6% | 100.0% | ||||||||
| Performance compensation | $69,436 | $75,208 | $0 | $81,457 | $0 | $73,899 | $300,000 | Total should equal $300,000 | |||||
| Base pay | 75,000 | 75,000 | 75,000 | 75,000 | 75,000 | 75,000 | 300,000 | Total should equal $300,000 | |||||
| Profit distribution | 30,000 | 30,000 | 30,000 | 30,000 | 30,000 | 30,000 | 120,000 | Total should equal $120,000 | |||||
| Total compensation | $174,436 | $180,208 | $186,457 | $178,899 | $720,000 | Total should equal $720,000 | |||||||
| Compensation Based on Net Income | |||||||||||||
| Net collections | $422,256 | $401,881 | $421,872 | $501,050 | $1,747,059 | ||||||||
| Support staff allocation | 119,883 | 133,625 | 139,663 | 129,217 | 522,388 | ||||||||
| Facilities allocation | 74,588 | 74,588 | 74,588 | 74,588 | 298,351 | ||||||||
| Supplies allocation | 31,270 | 34,854 | 36,429 | 33,704 | 136,257 | ||||||||
| Net income | $196,515 | $158,814 | $171,193 | $263,541 | $790,063 | ||||||||
| Proportion of net income | 24.9% | 20.1% | 21.7% | 33.4% | 100.0% | ||||||||
| Performance compensation | $74,620 | $60,304 | $0 | $65,005 | $0 | $100,071 | $300,000 | Total should equal $300,000 | |||||
| Base pay | 75,000 | 75,000 | 75,000 | 75,000 | 75,000 | 75,000 | 300,000 | Total should equal $300,000 | |||||
| Profit distribution | 30,000 | 30,000 | 30,000 | 30,000 | 30,000 | 30,000 | 120,000 | Total should equal $120,000 | |||||
| Total compensation | $179,620 | $165,304 | $170,005 | $205,071 | $720,000 | Total should equal $720,000 | |||||||
| Compensation Based on Multiple Factors | |||||||||||||
| Base pay | $75,000 | $75,000 | $75,000 | $75,000 | $300,000 | ||||||||
| Profit distribution | 30,000 | 30,000 | 30,000 | 30,000 | 120,000 | ||||||||
| Noneconomic compensation | 41,212 | 50,261 | 29,088 | 29,439 | 150,000 | ||||||||
| Based on net collections | 36,254 | 34,505 | 36,221 | 43,019 | 150,000 | ||||||||
| Total compensation | $182,466 | $189,766 | $170,309 | $177,458 | $720,000 | ||||||||
| Base pay | $75,000 | $75,000 | $75,000 | $75,000 | $300,000 | ||||||||
| Profit distribution | 30,000 | 30,000 | 30,000 | 30,000 | 120,000 | ||||||||
| Noneconomic compensation | 41,212 | 50,261 | 29,088 | 29,439 | 150,000 | ||||||||
| Based on work RVUs | 34,718 | 37,604 | 40,729 | 36,950 | 150,000 | ||||||||
| Total compensation | $180,929 | $192,865 | $174,817 | $171,388 | $720,000 | ||||||||
| Base pay | $75,000 | $75,000 | $75,000 | $75,000 | $300,000 | ||||||||
| Profit distribution | 30,000 | 30,000 | 30,000 | 30,000 | 120,000 | ||||||||
| Noneconomic compensation | 41,212 | 50,261 | 29,088 | 29,439 | 150,000 | ||||||||
| Based on net income | 37,310 | 30,152 | 32,502 | 50,035 | 150,000 | ||||||||
| Total compensation | $183,522 | $185,413 | $166,591 | $184,474 | $720,000 | ||||||||
| END |
Notes: (1) The RVUs listed are work RVUs, which are only one of the three component RVUs used in Medicare physician reimbursement. (2) Over the past five years, the average annual amount reinvested in the preactice was $80,000. (3) In 2005, each physician received a bonus of approximately $28,000.
Note: The model gives equal weight to each of the three non-economic factors.
