Benchmarking Academic Enterprise

1. Benchmarking Academic Enterprise Robert Belsole M.D. Vice Dean for Clinical Affairs

2. AIMS – Clinical Criteria • Every Faculty member needs a defined assignment, a portion of which is Clinical Performance • Clinical faculty should justify their base and incentive pay on RVU’s (75%MGMA, academic, by specialty), net collections and a portion of hard money.

3. Academic Health Centers • Most Academic Centers are changing their business culture • Subsidy vs. Competition • Mission based, asset managed, business intelligence models • Faculty evaluated and paid on productivity in clinical, education and research arenas

4. Clinical Performance • RVU’s • Billings • Collections • # patients, clinics, days in clinic • Night call • Procedures Simple and Fair

5. RBRVU - RVU • RVUS – units that quantify work, practice expense and malpractice costs for a physician service to establish payment • Harvard School of Public Health 1988 – charged to quantify physician work product • Most clinical services have a billing code and assigned RVU, 52.5% work, 43.6% expense and 3.9% malpractice • $37.89 – conversion factor – Medicare Rate

6. RVU • Geographical Adjustment (GPCI) • Facility vs. Non Facility • $37.89 – medicare payment

7. RVU Based Reward - Advantages • Clean and based upon work performed • Not based upon amount billed and collected • Same effort treating patients in all financial classes • Comparison to national benchmarks • Applicable to incentive and bonus plans

8. RVU Based System - Disadvantage • Teaching and research missions • Clinical grants and contracts • Hard salary support – state, hospital etc • Ancillary Services • Administrative duties • Expense ratios

9. AIMS Salary Requirements - Clinical • RVU – equal or exceed 75th percentile MGMA (academic) for specialty (or equivalent) • Aggregate Sum 1. net collections 2. E&G allocations 3. Professional Service Contracts 4. Clinical Research Revenue 5. Consultations, CPE and Other

10. RVU Threshold for patient care activities • Aggregate $um>>>>base salary + benefits +malpractice insurance (after group and department expenses)

11. AIMS Salary Requirements - Clinical • RVU Bashing • MGMA Bashing • USFPG Bashing – billing and collecting • State Appropriation Bashing – historical accident in distribution • DSR ….Practice Plan Bashing • Dean’s Tax Bashing • Department Expense Bashing • Division Expense Bashing – too high and paid with after tax dollars!

12. Taxation

13. Key Points – Clinical AIMS • FTE ASSIGMENT – unclear, 417 clinical faculty, ? FTE’s • GROUP MISSION • PHYSICIAN EXPECTATIONS • COM EXPECTATIONS • CONTROL YOUR OWN SHOP • AFTER TAX DOLLARS • STATE OF EXPENSES

14. UMSA Expense Summary(YTD March 31, 2006) • $78.25 million (68.7%) – Pt Service Revenue (PSR, fee for service) • $35.64 million (31.3%) – non PSR • $113.88 million (100%) – Total Revenue • $111.01 million – Overheads and Expenses* 51.4% Non Faculty ($58.5 million) 48.6% Faculty ($55.3 million) • Does not include state money such as E&G rate used in MSSC • and UMSA activities

15. Clinical Practice RVU Analyses • 2,155, 686 – Global RVU’s • 1,161,082(54%) – Work RVU’s • 994,604 (46%)– Practice Expense RVU’s

16. Total Revenue Analyses • $113.88 million - Total Revenue • $78.25 million – PSR • $15.27 million – Contract Revenue • $7.93 million – DIO/HLM Contract Rev • $4.08 million – DSR Grant Revenue • $4.47 million – “Other” Income • $3.35 million – Misc. donations etc • $535,589 – Capitation/Consultation

17. Total Revenue Analyses • $113.88 million - Total Revenue • $78.25 million – PSR • $15.27 million – Contract Revenue • $7.93 million – DIO/HLM Contract Rev • $4.08 million – DSR Grant Revenue • $4.47 million – “Other” Income • $3.35 million – Misc. donations etc • $535,589 – Capitation/Consultation

18. Total Revenue Analyses $78.25 million – PSR $4.08 million – DSR Grant Revenue $535,589 – Capitation/Consultation $82.87 million Adjusted Patient Service Revenue • 994,604 (46%)– Practice Expense RVU’s • $38.23 million – allocated expenses (-$20.31 million) • 1,161,082(54%) – Work RVU’s • $44.63 million – faculty expenses (-$10.72 million)

19. Revenue_RVU Analyses • $82.87 million Adjusted PSR • 2,155,686 global rvu’s • $38.44 per rvu • $37.89 per rvu – national conversion factor • Next $1 million Adjusted PSR, rvu = $38.91

20. Total Revenue Analyses • $113.88 million - Total Revenue • $78.25 million – PSR • $15.27 million – Contract Revenue • $7.93 million – DIO/HLM Contract Rev • $4.08 million – DSR Grant Revenue • $4.47 million – “Other” Income • $3.35 million – Misc. donations etc • $535,589 – Capitation/Consultation $31.02 million

21. DISCUSSION • Faculty performance can’t be based upon RVU work and expense ratios. Not enough patients and expenses are too high • State ($14 million) and Non Patient Service Contract ($31 million) revenues needed in the equation • College wide minimums are difficult to apply to Clinical Performance since “base” is not defined equally by all departments

22. AIMS – Clinical Criteria • Every Faculty member needs a defined assignment, a portion of which is Clinical Performance • Clinical faculty should justify their base and incentive salary on RVU’s (75%MGMA, academic, by specialty), collections and a portion of hard money. • Clinical FTE income derived from clinical revenue should be based upon a 55% (UMSA) and 45% (Faculty) split. • All clinical, educational and research corporate expenses need to be defined and subjected to the same standards as applied to the faculty • A complete analysis would also evaluate the contribution of the state to the clinical, educational and research missions.

23. TRUE AIMS SYSTEM • We have – rvu’s, billing, collections, patients, clinics, procedures • We don’t have - true clinical, education and research expense in corporate and state systems • We need – expense/rvu expense/$collected expense/patient encounter NEXT STEP