Medical Direction

Aggregate Facility Medical Director Payments

While determining the fair market value of individual contacts is important, it is also a great idea to take a step back and look at the bigger picture.  By looking at your facility’s total physician expenditure or the expenditure by type of service (i.e. call coverage, medical direction, hospital-based services) and comparing to your peers can allow you to see whether you are in the same ballpark range.  These aggregate numbers can help highlight if you have too many medical directors or if you are consistently paying on the high end.

The graph below shows the percentiles for Total Annual Payments for Medical Direction.  It seems that hospitals, especially at the higher end, are paying less in aggregate for medical directors at their facilities than in 2013

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If you want access to more of these total facility benchmarks, email This email address is being protected from spambots. You need JavaScript enabled to view it..

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Considering Opportunity Cost for Physician Compensation

When it comes to paying physicians for non-clinical work, it is (too) easy to make mistakes that could cost your organization and could be in violation of Stark and Anti-Kickback laws.

Should you pay highly-compensated specialty physicians for non-clinical positions more than you pay a PCP or a pediatrician?  While it could be argued that their time is “worth more”, it is also true that the administrative tasks you are paying them to do shouldn’t necessarily take their clinical salaries into account.  How should your organization respond?

Considering opportunity cost is helpful.  Opportunity cost assumes that there are other alternatives to the activity you are asking the physician to perform.  It’s easy to see that a neurosurgeon might not want to be a medical director if she could use her limited time to practice medicine–and get paid more for it!  Furthermore, because medical directorships, chiefs of staff, and other administrative positions often require that a certain specialty of physician be in the role, physicians of higher paying specialties have leverage.

So, what does the government say about this challenge?  Not surprisingly, the Office of the Inspector General (OIG) is vague.  While it doesn’t forbid compensating higher-paid physicians more in non-clinical roles, it does warn that convoluted compensation structures could mask kickback payments (from Advisory Opinion No. 07-10).

Ultimately, even if you do not base payments on opportunity cost you should at least consider the physician’s perspective.  Most always, physicians who have been asked to play an administrative role have considered how else they could be spending their time, not to mention, how much more they could get paid.  Depending on your market, this could be highly significant to establishing a fair rate…or it might not.

Experts at MD Ranger recommend that every organization develop policy from their overall goals and clinical service needs.  Consistency, data, and documentation should be the backbone of your contracting process.  Curious to learn more about medical directorship compensation?  Check out our webinar on September 19th at 10:30 am PDT.

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Emergency Medicine Medical Directors Top the Charts for Most Hours Worked

Previously, we have investigated key trends in call coverage arrangements using MD Ranger’s 2017 physician contracting benchmarks. Now, let’s look at medical directorship agreements and examine which services reported the highest median hours worked per year.

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This graph shows the five medical directorships with the highest median hours reported per year. They are Emergency Medicine, Ambulatory Services, Pathology, Trauma Surgery, and Cardiology - Heart Center. Comparing to the benchmarks from the past four years, you can see where hours have increased or decreased in scope. As you can see, the most dramatic changes are in Emergency Medicine, especially over the past two years.

The list of medical directorship positions with the highest reported hours remained mostly the same as last year, when Emergency, Trauma Surgery, Pathology, and Cardiology-Heart Center all also featured. Ambulatory Services, the only new service in the top 5, replaced Pediatric Surgery from the 2016 list.

One major trend we see is a continuing spike in hours worked in medical directorships in Emergency Medicine, well beyond the other top 5 services by hours per year. This stands in sharp contrast to the rest of the top services where the trends are leveling off or even decreasing.

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Hospital Characteristics Impact Physician Compensation Rates

Since we published new benchmarks in April we’ve analyzed over 24,000 contracts in our database to uncover key insights. Though rates at the individual service level remain relatively stable year over year, overall physician costs paid by hospitals have skyrocketed in the last decade.

At the individual contract level, several factors consistently correlate with higher contract rates:

  • Trauma centers pay a 32% premium for call coverage contracts.
  • Larger hospitals, for every 100 bed increase in ADC, hospitals payments are 22% higher for call coverage and 15% higher for medical direction annual payments (hourly rates are no different).
  • Multi-campus arrangements, for both call coverage and medical direction, save money:
    • 33% less for call on a per campus basis
    • 18% less for direction on a per campus basis, with the difference related to higher hours not higher hourly rates
Physician Expenses per ADC by Beds

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How Do Hours Differ for Leader and Non-Leader Roles?

Payment and hours of service benchmarks for medical directorships are available from several sources. However, in today’s health care environment, facilities need physicians for a number of reasons, and it can be difficult to convince a physician to give up time to sit on a committee, serve as a medical staff officer, train for CPO or EHR, help with peer review or participate in quality initiatives. Establishing a fair and compliant payment rate for a position that does not need a particular type of specialist can be a challenge!

How Do Hours Differ Between Leaders and Non-Leaders?

Median annual payments are higher for leaders (committee/initiative chairs and directors) than for non-leaders. For Case/Care/Utilization Management, the annual payments for chairs and directors are more than double the annual payment for non-chairs in Case/Care/Utilization Management. These differences reflect the time and effort required for managing or leading a process compared to members of a committee or task force, or one-time training compensation.

Annual Payment Ranges for Leaders and Non-Leaders

Are Payments Increasing Over Time?

Payments in 2015 are higher than either 2013 or 2014 across all quantiles.

Non-Clinical Administrative Annual Payment Rates

To learn more about paying leaders and non-leaders, email us at This email address is being protected from spambots. You need JavaScript enabled to view it..

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MD Ranger's 2015 Reports: Most Time Intensive Medical Directorships

Medical Directorships vary in the number of hours they require to complete the required duties. The number of hours often depends on the specialty of the medical director. The specialties with the highest number of hours reported did not change between MD Ranger’s 2014 Benchmark Report and the 2015 Benchmark Reports. However, in most of the specialties, the number of hours decreased.

Across the top five most time intensive medical director specialties, they average just over 460 hours per year, or nearly 40 hours each month.

To find out more about the hours reported for medical directorships of other specialties, email us at This email address is being protected from spambots. You need JavaScript enabled to view it..

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MD Ranger’s 2014 Reports: Annual Hours for Administrative Positions

MD Ranger collects not only information on the hourly rate and annual payments for medical directorships, leadership, and administrative services but also the number of annual hours.  Knowing the annual hours a physician works is important because two directors who have the same annual compensation for their role may work vastly different hours.  If one physician works many more hours, it can lead to an annual payment rate which looks like it is compliant but, when the hourly rate is computed, the payment is in fact very high.

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Annual hours at the 25th and 50th percentile have remained the same over the past three years of data.  At the 75th and 90th percentiles, there has been a decrease in the number of hours.  This may suggest a downward trend in the number of annual hours for medical directors, administrative, and leadership services. For more information or if you have questions, email me at This email address is being protected from spambots. You need JavaScript enabled to view it..

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MD Ranger’s 2014 Reports: The Most Time Intensive Medical Directorships

In October, we wrote about the Medical Administrative Roles with the Highest Median Hours Worked.  Hours worked are just as important as the amount paid in determining whether rates are fair market value.  It is no surprise that some medical directorships are more time intensive than others. In the graph below, you can see the top five most time intensive medical directorships for 2013 (blue) and 2014 (green).  These numbers are the median values from all hospitals.  The three services that appear in both 2013 and 2014 saw an increase or no change in the number of annual hours worked. The number of hours on the upper end of the spectrum seems to be increasing.  The number of hours required in order to make the top five in 2014 increased by 70 hours over the number of hours required to make the top five in 2013. We can see in the graph below that while three of the top five time intensive specialties remain the same from 2013 to 2014.

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If you have questions or want access to more medical directorship and administrative position benchmarks, email me at This email address is being protected from spambots. You need JavaScript enabled to view it..

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MD Ranger’s 2015 Reports: Annual Hours of Service for Medical Direction, Non-Director Administration, and Leadership Positions

MD Ranger collects information on the annual payments and hourly rates for medical direction, non-director administrative positions, and medical staff leadership positions. Tracking the number of hours a physician dedicates to administrative positions is not only a Stark Law best practice, it allows a hospital to see if they have hidden overpayments. In some cases, a medical directorship may have a completely reasonable hourly payment, but the physician may be working a large number of hours which results in an overall payment above fair market value.

How have the number of hours changed over MD Ranger’s last four years of reports? They have remains fairly stable especially at the 25th percentile and the median, as shown in the graph below:

The number of hours does vary by the type of service. Hospital-based services consistently demand more hours than other type of administrative services while leadership positions generally require fewer hours to perform duties.

Annual Hours of Service for Administrative Positions Graph

If you are interested in learning more about MD Ranger's number of hours benchmarks, email This email address is being protected from spambots. You need JavaScript enabled to view it..

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MD Ranger’s 2015 Reports: How Many Physician Administrative Positions Do You Pay?

Before deciding to pay a physician for a service, it is important to determine if it commercially reasonable to pay for the position. One area to be careful of hidden overpayments is in paying too many medical directors.

Hospitals often sweeten the deal for physicians by offering them a medical directorship. However, they don’t always look at how many other physicians they have also given this same deal. For example, if your facility has nine cardiologists and is giving each one a medical directorship; they are probably not all commercially reasonable positions to pay.

Because MD Ranger collects comprehensive contract information from our subscribers, we are able to determine the percentage of subscribers who report paying for the service. For Obstetrics/Gynecology, 16% of our subscribers report paying for medical directors. Of those, the graph below shows how many positions of Ob/Gyn medical direction they pay.

If you have more questions about whether your organization is paying too many medical directors, reach out to us at This email address is being protected from spambots. You need JavaScript enabled to view it..

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Non-Directorship Administrative Roles Have Unique Payment Challenges

Payment and hours of service benchmarks for medical directorships are available from several sources. However, in today’s health care environment, facilities need physicians for a number of reasons, and it can be difficult to convince a physician to give up time to sit on a committee, serve as a medical staff officer, train for CPO or EHR, help with peer review or participate in quality initiatives. Establishing a fair and compliant payment rate for a position that does not need a particular type of specialist can be a challenge!

Be Wary of Opportunity Cost

In positions where specialty is not a requirement for the role, such as EHR implementation, quality initiatives, utilization review, or chief of staff, many valuation experts advise that opportunity cost should not be considered a factor in physician payment rates, and FMV for clinical services may differ from administrative services.

Federal Register comments on Stark III regulations state:

A fair market value hourly rate may be used to compensate physicians for both administrative and clinical work, provided that the rate paid for clinical work is fair market value for the clinical work performed and the rate paid for administrative work is fair market value for the administrative work performed. We note that the fair market value of administrative services may differ from the fair market value of clinical services.

Hours Vary

Many hospitals and health systems set a standard hourly rate for all physician administrative contracts, sometimes paired with a FMV opinion on that rate. This can be an effective policy, however, it does not negate the need to define and monitor the hours associated with each position since total payments must also be reasonable. Ensuring that the job description justifies the hours, and that time records are kept, collected, and reviewed is essential to a robust compliance process.

Hours among non-director positions tend to vary since the variety of assignments is broad. Meeting frequency, residency or teaching duties, nature and scope of quality initiatives or intensity of training for IT, POE or other training programs each vary by institution, subject and physician role, hence good recordkeeping is essential. Committee chairs and administrative/initiative leaders of non-clinical initiatives often require more hours than non-leaders as well.

The graph below shows the variation between types of non-clinical administrative positions:

Annual Hours of Service for Non-Clinical Administrative Positions

To learn more about paying for non-director administrative positions, email us at This email address is being protected from spambots. You need JavaScript enabled to view it..

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Paying for More Physician Administrative Positions Than You Think?

Because MD Ranger collect holistic data from hospitals, we are able to report the number of paid administrative positions by service.  While many services within a hospital necessitate only one paid administrative position, sometimes the hospital structure or the specific service dictate a need for more than one paid position.  If you don’t have justification for having multiple paid administrative positions, it may not be commercially reasonable to pay.  This could be a compliance red flag.

In the graph below, we can see that 45% of MD Ranger subscriber facilities pay just one administrative role for pathology while 32% have two paid positions, 18% pay three positions, 3% pay four positions, and 2% of facilities pay five or more positions.

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Where does your facility fall in this pie chart?

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Physician Administrative Roles with the Highest Hours Reported

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According to our database, trauma surgery medical directors and pathology medical directors spend the most hours working in administrative roles.  The above graph is based on median hours collected from over 300 facilities across the US.

Other physician administrative roles that command more hours are occupational health, teaching/research, heart center, and ambulatory services.

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Research/Data Management Paces Leadership and Administrative Roles for Most Hours Worked

Last time, we tracked which medical directors worked the most hours annually by using MD Ranger’s 2017 Physician Contract Benchmarks. Let’s take a look at agreements for physician leadership and administrative roles and examine which services reported the highest median hours worked per year.

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This graph shows the top six leadership and administrative roles with the highest number of annual hours. They are Chief of Staff, Utilization Management, Information Technology/EHR, Residency/Teaching, Case/Care Management, and Research/Data Management. Comparing the number of hours to benchmarks from previous years, you can see that there have been increases for several physician administrative roles in 2017, such as Residency/Teaching, Case Management, and Research/Data Management. However, after two years of increases, Chief of Staff hours have decreased from 2016 to 2017.

The set of leadership and administrative positions with the most annual hours remained relatively stable from 2016 to 2017. Quality Initiatives saw its annual hours dip in 2017 and is the lone service to no longer appear on the chart.

With the notable exception of Chief of Staff, most administrative and leadership positions have seen either a stabilization or a slight increase in the number of hours worked annually. This drives the trend in slight growth in annual payments made for these physician leadership and non-director administrative positions.

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Too Many Medical Directors?

It’s easy to get caught up in the details of individual medical directorships.  As you determine how much you should pay each physician depending on the scope of the role and their specialty, it’s easy to miss the bigger picture. How much are you spending on your medical directors, in general, across your organization’s facilities?

For many MD Ranger subscribers, understanding where their facility falls on the spectrum is critical to their bottom line. As our industry becomes more sensitive to rising costs, physician costs will and should be scrutinized. Given that physician contracting costs can be up to 6% of a hospital’s operating expenses (salaried physicians not included), ignoring rising costs of physician administrative roles might cost your organization hundreds of thousands of dollars.

Benchmarking these types of costs helps organizations understand if they are doing better (or worse) than peers, as well as give insights into how to be more efficient. Here’s what we found our subscribing hospitals spending on medical directors in 2013:

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What is the Best Payment Method for Non-Clinical Administrative Contracts?

Payment and hours of service benchmarks for medical directorships are available from several sources. However, in today’s health care environment, facilities need physicians for a number of reasons, and it can be difficult to convince a physician to give up time to sit on a committee, serve as a medical staff officer, train for CPO or EHR, help with peer review or participate in quality initiatives. Establishing a fair and compliant payment rate for a position that does not need a particular type of specialist can be a challenge!

What is the Best Payment Method for Non-Clinical Administrative Contracts?

Hourly payment rates may not be the best method to pay for one-time events or short-term assignments like training, meeting attendance, or task forces. Per meeting payments or monthly stipends may be easier to administer than keeping and submitting time records for some initiatives or training sessions. If the per meeting payment is reasonable, the need for a one-off time card may not be as crucial if minutes or other records of participation are kept.

Distribution of Payment Methods for Non-Directorship Positions

To learn more about methods for paying non-director administrative services, email our team at This email address is being protected from spambots. You need JavaScript enabled to view it..

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