Essay – Bangor Family Physicians and Compensation Case Study

This assignment entails evaluating an excel spreadsheet and doing the essay as indicated by the attached instructions. You will need the case study to do the assignment and I will get that tomorrow evening. But thought I would post what I do have in case anyone has any old information on the “Bangor Family Physicians and Compensation Case Study.” Please see attached documents. The case study that I can send tomorrow evening is about 6 pages long. The work has to be precise and detailed. It’s a Master’s level course.

Assignment 6.2:

Bangor Family Case

In order to ensure that a physician practice performs well financially and operationally one aspect that must be considered is the compensation methodology chosen to pay the physician. This methodology could be based on financial factors such as revenue or net income produced. Alternatively, the model could be based on productivity or quality/patient satisfaction of some combination of the above. This following assignment will involve you taking a closer look at these methodologies and determining which you believe is best among the choices given. Although there is not necessarily one correct answer, finding the methodology that fits best for the physicians is very important in ensuring best or desired performance by the physician.

Before beginning this assignment, please listen to the podcast below, provided by Dr. Budd.

Click the link below to listen to the podcast. To download the podcast, right-click on the link, click Save Link As…, and save it to your computer.

Bangor Family Case

Read the Bangor Family Case in your course pack, and view the following

Productivity Data

compiled by your instructor: (ATTACHED With Assignment)

Productivity Data (Productivity Data is also attached as an Excel Spreadsheet)

Then, prepare a case briefing in which you answer the following questions:

1. Review physician compensation under each of the four compensation systems described above. Briefly describe to a colleague unfamiliar with these methods how each works.

2. Identify the strengths and weaknesses of each model.

3. Recommend the system that you believe is best for Bangor Family Physicians. In addition, discuss why managing a physician practice and maintaining the appropriate amount of productivity can be a significant challenge for any organization or group of individuals.

Your paper should not exceed 500 words.

All sources, including course materials, must be cited in text in APA style. Remember that course materials need not be included in your references page, but all other references must be.

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C

ase

1

1

SE 11

06

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/05

ANGOR FAMILY PHYSICIANS

EL-GENERATED DATA section. However, some values in the student version INPUT DATA

amount in base pay

A B C D Total

300,000

,0

,039

0,000

0,208

720,000

5,304

720,000

720,000

50%

A B C D Total

,800

4,667

6,255

1,881

1

2

4

2

2

1

Total $522,388

A B C D Total

91

87

12 16 8 4 40

15 12 10 18 55

1 2 0 0 3

Physician Identifier
A B C D Total
Net collections $422,256

$421,872 $501,050 $1,747,059

$0

75,000 75,000 75,000 75,000 75,000 300,000 Total should equal $300,000

30,000 30,000 30,000 30,000 30,000

$177,509

$177,443

$720,000

Work RVUs 4,667 5,055 5,475 4,967 20,164
Proportion of revenues

100.0%

Performance compensation

$0

$0

$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

$720,000 Total should equal $720,000

Net collections $422,256 $401,881 $421,872 $501,050 $1,747,059

522,388

74,588 74,588 74,588 298,351

136,257

Net income

100.0%

Performance compensation

$0

$0

$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

$720,000 Total should equal $720,000

Base pay

$75,000 $75,000 $75,000 $300,000

Profit distribution 30,000 30,000 30,000 30,000 120,000

150,000

Total compensation

$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

150,000

Total compensation

$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

150,000

Total compensation

$720,000

C

A Instructor Version Copyright 2

0
8 3 by FACHE
B
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
MO

D
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 $

300,000 Based On
Total amount in performance plan Net revenue $177,509 $17

4 10 $177,443 $1

91 $

720,000
Total amount in profit distribution 12 Work RVUs 4,667 174,436 18 186,457 178,899
$720,000 Net income 6,2

55 179,620 16 170,005 205,071
Multiple Factor Distribution: Mult. factors* 180,929 192,865 174,817 171,388
Percentage based on financial performance 50%
Percentage based on noneconomic factors *Multiple factors plan includes non-economic factors plus work RVUs
100%
Historical Physician Data:
Physician Identifier
# Patients 4,023 3,567 3,966 4,244 15
# RVUs 5,055 5,475 4,967 20,164
Professional procedures 6,972 7,2

87 6,742 27,256
Gross charges $527,820 $535,841 $602,675 $576,312 $2,242,648
Net collections $422,256 $

40 $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 $75,168
Receptionist 48,652
Nurses 175,264
Medical assistants 52,615
Billing clerk 62,165
Laboratory technician 46,788
Other costs 61,736
Non-Economic Data:
Average patient satisfaction score 93 90 361
Number of committee meetings
Continuing education credits
Professional assn. leadership
182 221 128 130 661
MODEL-GENERATED DATA:
Compensation Based on Net Collections (Revenue)
$401,881
Proportion of revenues 24.2% 23.0% 24.1% 28.7% 100.0%
Performance compensation $72,509 $69,010 $0 $72,443 $86,039 $300,000 Total should equal $300,000
Base pay 75,000
Profit distribution 30,000 120,000 Total should equal $120,000
Total compensation $174,010 $191,039 Total should equal $720,000
Compensation Based on Work RVUs
23.1% 25.1% 27.2% 24.6%
$69,436 $75,208 $81,457 $73,899
$174,436 $180,208 $186,457 $178,899
Compensation Based on Net Income
Support staff allocation 119,883 133,625 139,663 129,217
Facilities allocation 74,588
Supplies allocation 31,270 34,854 36,429 33,704
$196,515 $158,814 $171,193 $263,541 $790,063
Proportion of net income 24.9% 20.1% 21.7% 33.4%
$74,620 $60,304 $65,005 $100,071
$179,620 $165,304 $170,005 $205,071
Compensation Based on Multiple Factors
$75,000
Noneconomic compensation 41,212 50,261 29,088 29,439 150,000
Based on net collections 36,254 34,505 36,221 43,019
$182,466 $189,766 $170,309 $177,458
Based on work RVUs 34,718 37,604 40,729 36,950
$180,929 $192,865 $174,817 $171,388
Based on net income 37,310 30,152 32,502 50,035
$183,522 $185,413 $166,591 $184,474
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.

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