5.14.24
San Diego, CA—May 14, 2024: Today MD Ranger unveiled its 15th annual report on physician contract benchmarks. This year's benchmarks, derived from 2023 data, demonstrate the scope and magnitude of physicians' roles in hospitals and integrated health systems.
Healthcare providers use MD Ranger to set payment rates, document fair market value (FMV), and comply with federal and state fraud and abuse laws. Acquired in 2023 by ECG Management Consultants, a Siemens Healthineers company, MD Ranger is used in 180-plus hospitals across the US that utilize its automated documentation tools and comprehensive benchmarks as the foundation for compliance processes.
Drawing from over 51,000 contracts across hundreds of healthcare providers nationwide, this report is recognized as one of the most comprehensive surveys of hospital-physician transactions in the US. The benchmarks span various services, including ED call coverage, medical directorships, administrative services, hospital-based services, medical staff leadership, telemedicine, diagnostic testing, and clinical hourly rates.
2024 Benchmark Key Findings and Expert Analysis
Many organizations have faced complex hospital-based service negotiations and upward pressure on subsidies provided to medical groups. This is demonstrated by an average increase of 15% in hospital-based total annual payment benchmarks. This increase exceeds all other types of transactions including ED call coverage, which only increased 3% on average. "The new benchmarks illustrate what we're seeing in our valuation practice—increasingly complex and expensive contracts for coverage of hospital-based services," noted Aurora Young, a partner at ECG.
Fewer hospitals are compensating physicians for coverage of hospital-based services on a per diem (per physician, per day) basis, while overall stipends with larger groups are becoming more common. This is seen especially in obstetrics/laborists. Tessa Kerby, Associate Principal at ECG, states, “looking specifically at inpatient OB/GYN coverage, the market transition toward laborist programs is not surprising. The prevalence of high-risk pregnancies has doubled in recent years, which has led to hospitals investing in robust laborist programs to provide support and mitigate risks. This, paired with physician shortages and provider desire for less burdensome call rotations, has led hospital administrators to invest in reliable coverage via laborist groups.”
ECG’s Clark Bosslet, Partner, and Ryan Horne, Senior Consultant, observed a similar transition to overall stipends with larger groups in anesthesia services. Anesthesia costs have steadily increased over the past five years, driven primarily by growing demands for anesthesia services in less clinically efficient settings like non-operating-room anesthetizing (NORA) sites, extended evening and weekend coverage, and surgical flip rooms. This trend, which predated the pandemic, has been exacerbated by a growing workforce gap wherein only four new anesthesiologists join the workforce for every five who leave, a gap that can't be adequately backfilled by CRNAs and CAAs. And finally, the No Surprises Act has granted additional bargaining power to commercial payers, putting downward pressure on private groups to stay in-network at reduced rates. Over the past six years, this confluence of trends has increased the gap between the cost of anesthesia providers and the professional collections they generate; health systems are being asked to fund the difference.
Meanwhile, physician payments account for a large and growing component of hospital expenses. Hospital-based physicians are facing growing collections challenges resulting from implementation of the No Surprises Act and decreases in Medicare rates. “With the growing shortage of physicians in specialties like anesthesia and radiology, physicians look to hospitals to assist in recruitment and retention initiatives embedded in stipends and hospital contracts,” explains Penny Stroud, an MD Ranger founder and a principal at ECG.
Several hospital-based services remained stable at the median in 2024, including general hospitalists, critical care, and maternal/fetal medicine. While growth in payment trends for these services in 2024 was not observed, over time many of these services have experienced large increases. Since 2020, anesthesia annual payments have increased more than 50% at the median and have doubled at the 75th percentile. Other services experienced dramatic increases this year, including radiology, emergency, and trauma surgery, whose median benchmark increased more than 20%. At the median, trauma surgery and general hospitalists were the highest-cost hospital-based services at almost $1.8 million; however, at the 75th percentile, anesthesia exceeded trauma surgery at $3.9 million versus $3.0 million.
New data suggests less pressure on ED call coverage arrangements compared to last year; however, there are exceptions. Across all services, ED call per diem rates increased an average of 5.7% at the median and only 2.8% at the 75th percentile. However, MD Ranger observed that four specialties increased more than 20% at the median, including oral/maxillofacial, pediatric orthopedic surgery, gynecology, and anesthesia.
“Financial relationships between physicians and healthcare entities are scrutinized more closely than ever before,” explains Kate Taylor, an associate principal at ECG. “As such, use of high-quality benchmark data within compensation governance frameworks may help organizations demonstrate that their compensation arrangements are reasonable and fair, reducing the risk of violation of fraud and abuse laws.” CMS noted in its regulatory guidance in 2021 that benchmarks are a starting point and professional judgment should be used when determining FMV. It is important to consider both survey data and specific facts and circumstances of each transaction.
The 2024 edition of benchmarks introduces over 35 new services, including craniofacial/facial injuries call coverage and ECMO medical direction. MD Ranger's benchmarks continue to underscore the substantial impact of physician transactions for hospitals and integrated health systems. This year's report helps healthcare organizations navigate the complexities of FMV, setting and documenting payment rates, and regulatory compliance. With the integration of MD Ranger, ECG affirms its dedication to providing healthcare organizations with the tools necessary to navigate an ever-evolving physician landscape, ensuring compliant and sustainable provider compensation practices.
For questions or to purchase a copy of the 2024 benchmarks, please contact Evan Rosborough.
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About ECG Management Consultants, a Siemens Healthineers Company
With knowledge and expertise built over the course of 50-plus years, ECG is a national consulting firm that is redefining healthcare together with its clients. ECG offers a broad range of strategic, financial, operational, and technology-enabled consulting services. ECG is an industry leader, offering specialized expertise to hospitals, health systems, medical groups, academic medical centers, children’s hospitals, ambulatory surgery centers, investors, and payers/health plans. As an affiliated partner of Siemens Healthineers, ECG’s subject matter experts have a proven track record of delivering results fueled by top talent and technology.