Reimbursement for Physician-Managers

January 1, 2008

I am the physician-practice administrator for a large practice. What is fair compensation for doing all the administrative work (and there is a lot)? I was interested in no-weekend call in exchange for doing the administration. Or what is a fair dollar amount?

Question: I am the physician-practice administrator for a large practice. What is fair compensation for doing all the administrative work (and there is a lot)? I was interested in no-weekend call in exchange for doing the administration. Or what is a fair dollar amount?

Answer: I’ve seen groups solve this in various ways. Management compensation is most common in practices with a compensation structure built on productivity in which a physician’s clinical productivity is hampered because of the time that physician devotes to management tasks and to serving as the only real go-to physician contact in this regard. In such a case, that physician needs to catch up and be paid reasonably.

Management salaries can be paid based on actual time spent at an hourly fee, a set fee, or a percentage of the practice’s profits per year.

Your proposal should take into account the value you bring to the group in your management role. That is, how is this position affecting your group’s profitability? Do you get more revenue from your managed-care contracts? Does the position involve managing operations only? Your answers to questions like these can help you determine the value of the position and, subsequently, its fair compensation.

Some groups feel that a physician-administrator basically saves them from having to hire another administrator. In that case, compensation is based on an administrator’s going salary - in other words, the group pays the physician the amount the group is saving by not having to hire another staff person.

There’s really no industry standard for this, so your group should principally look at its overall budget and negotiate.