The passing of the Patient Protection and Affordable Care Act has led to an increase in mergers among healthcare groups, including anesthesia practices. The goal of these anesthesia group mergers is to increase and maintain strength in a changing medical industry, keeping jobs secure as well as ensuring continued revenue. Such mergers can offer attractive benefits, such as increased visibility in the marketplace, expansion of customer bases, and even increased revenues. However, they also cause very real challenges, not only for the practices that must combine but also for the individual anesthesiologists who provide the day-to-day care. Are anesthesia group mergers causing compensation issues? In some instances, yes.
Common Compensation Challenges
It may seem natural for two anesthesia groups to merge and position themselves as one larger, stronger unit, but the reality is that different practices bring unique ideas, personalities, expectations, and work cultures to the table. Often, the merging companies lock horns over compensation issues, and the result can be messy. Here’s an example of the type of problems merging anesthesia practices may face.
Let’s say Practice A takes an equal-sharing approach to compensation, which means each of its members receives a set percentage of the practice’s revenues after necessary expenses are paid. Practice A will merge with Practice B, which takes a more individualistic approach to compensation. Practice B’s productivity-based plan compensates each member based on his individual productivity. When a lump-and-share and an individualistic plan combine, there’s sure to be a clash of ideas and expectations as well as no small amount of friction.
In addition to the basics of income and compensation, past approaches to assignments can become another source of problems. Perhaps one group shared assignments equally and also divided other duties, such as completing administrative work, serving on committees, and taking call duty. In contrast, the other practice’s members may vie for the cases they want, decide whether or not to take full schedules and call duty, and need a good deal of encouragement to serve on committees or do administrative work.
A Blended Solution
Often, the solution to dealing with merger compensation problems is not choosing one approach over the other. Each approach has merits, so a blended approach that incorporates favorable benefits of each plan can translate into reasonably happy members and desirable productivity. Here are three plan types that, used together, may work in such situations:
- Adopt a blended-compensation approach– This involves taking the total amount of compensation for the entire group and dividing it by productivity (work) units for all of the providers in the group. The result is an average amount of compensation per productivity unit. Individual practitioner compensation incorporates individual relative value units multiplied by the blended value units.
- Modify existing relative value unit measurements –This effort can help improve pay equity despite differences in case load and assignment complexity. Essentially, this means assigning personal credits based on such things as working less desirable schedules (nights and weekends), performing certain maintenance tasks, and taking on more invasive assignments. This approach can help improve compensation-based recognition for productivity while smoothing disparities brought on by case load differences.
- Add in revenue sharing –Introducing a partial revenue-sharing plan can help mitigate problems caused by scheduling differences and efficiency challenges. With this approach, a portion of the individual compensation units are pooled and then distributed to the members periodically.
The compensation plan that proves most desirable may vary depending on the characteristics of the merging anesthesia groups; the unique qualifications, experience, and expectations of the members; and the newly formed group’s goals going forward. Combined, the above three approaches can help equalize income and reduce individual compensation decreases due to scheduling and assignment disparities. At the same time, they recognize and reward personal productivity.