Horty Springer’s Physician Hospital Contracts Seminar: Lessons Learned

Keeping ER Call Pay in Perspective

One might assume that if your company’s core business is the design, implementation and on-going management of call pay programs that you would be a proponent of hospitals paying physicians for ED call coverage. That is not necessarily true at MaxWorth Consulting Group. First, we sincerely believe that “paying for call” is somewhat of a misnomer. Even at the highest percentiles of Fair Market Value, the “pay”, when justifiable, cannot be reconciled with the impact of “call” on a physician’s family and their lifestyle as well as the cost for lost revenue/opportunity from practice interruptions. However, we believe that in certain circumstances, physician demands to be paid for call is moving beyond the scope of reasonableness and perhaps could be legally challenged. Essentially paying for emergency department unassigned call coverage was created to recognize the evolution of real “pressure” in the delivery of emergency medical services. This is especially true in the small and midsize markets where community hospitals are struggling to meet increasing demands from their overly utilized emergency rooms. In the midsize and small markets there continues to be a shortage of available specialist with no end in sight and for the ones that are available, they are becoming less willing to adhere to the typical medical staff bylaw requirement to cover call without some form of compensation. Hospitals are losing revenue from the increasing number of transfers away from their facilities to nearby larger markets. This obviously puts patient care at risk and increases the challenges to maintain adequate operating margins.


In the small and midsize markets across the country it is difficult to justify complex integration strategies and employment arrangements which are becoming more common in larger hospitals and health care systems. There is an obvious “Catch 22” in play in these markets. The challenge to meet a charitable mission of providing for the poor and less fortunate is getting out of reach for some within these markets. As such, paying for call coverage becomes a necessary and justifiable strategy for aligning the interests of the hospital and meeting the EMTALA mandated emergency department coverage requirements.


Physicians who serve the small and midsize market hospitals are experiencing similar financial pressure. In addition, with 1 in 4 emergency room patients having no insurance and the perceived direct correlation of indigent patients to medical malpractice claims, physicians are experiencing increased risk without the corresponding revenue that is fundamental in most other industries.


In these situations it is certainly justifiable to consider paying for call (or enhancing and expanding current call pay arrangements) but we believe that alternatives to traditional call pay arrangements should be explored. We have found that one of the primary reasons that most hospital executives in small and midsize markets resist the demands for call pay is the fear of opening “Pandora’s Box”. Most executive leaders are (perhaps from personal experience) familiar with situations where a hospital started a call pay program with a traditional approach of paying a cash per diem to one or two specialties that were putting the most pressure on them to get paid. And what began as something manageable quickly spiralled out of control. The per diems originally agreed to are never enough and the specialties left out, begin asking, “Why not us?” This is sometimes referred to as the “slippery slope” and it is perhaps the number one threat to the sustainability of call pay arrangements.


Our firm is experiencing exponential growth because we have created a cost effective, long-term solution that provides an antidote for the "slippery slope" and "zero sum outcomes" that paying cash per diems creates. Our trademarked and patent pending methodologies includes a physician driven process for quantifying the relative value of the actual burden of call along with a budget distribution model that employs fair market value benchmarking techniques. Our turnkey solution is mutually beneficial and offers unique benefits not found in any other approach to call pay. As such, for the situations that justify paying for call, we provide education and resources that assist our clients in evaluating alternatives, defining budgets and communicating a mutually beneficial alignment strategy effectively to their medical staffs. Furthermore, we find that the ongoing management of our programs which includes a process for reinforcing the value of the program is essential in keeping physicians informed and appreciative of the features and benefits of the program.


Where the previously described conditions are not present - where coverage is adequate and doesn’t impose a significant burden, the demand to be paid hardly seems justified. We see this situation most often in large urban markets where paying for call coverage results more from responding to competition than any real burden experienced by physicians. We are particularly concerned when we see hospital-based specialties in large markets demanding or actually being paid for call. These specialties have no practice interruption and due to the number of physicians in their practice groups, they are rarely on call. In addition, they typically have exclusive contracts and most are subsidized by the hospital. Furthermore, many of the larger hospitals have residency programs, hospitalists, PA’s and other forms of support that virtually eliminate the burden of call for their medical staffs, yet, they are paying for call or experiencing pressure to pay for call.


It is clear that there are considerable risks in paying for call just to respond to physician demands. We frequently talk with executives who tell us that they are dealing with the “pay us or we are leaving” scenario. And some are working through bad decisions made in “the heat of the moment” where call payment arrangements were made that are obviously outside of fair market value and outside the scope of the OIG 07-10 opinion. However, reversing existing arrangements is difficult if not impossible without great disruptions.


So, in the large markets we believe that employment, integration and other arrangements will ultimately counteract the demands for call pay. In these environments perhaps paying for call was never the right or a legitimate response. But, for the small and midsize markets we believe that a mutually beneficial, cost effective, physician driven call pay program is not only appropriate, justifiable and rational today, it will continue to be essential for the delivery of emergency medical care for the foreseeable future.


We believe that it is important to keep emergency department call pay in perspective. The following summation will provide a good starting point for a productive discussion and hopefully help keep paying for call in perspective:

1. It is much better for all stakeholders to be proactive in initiating discussions between administration and medical staffs about call compensation.

2. Fairness, transparency and inclusion are more meaningful than the amount of pay. Based on thousands of physician interviews we surprisingly find that what drives division and disharmony has more to do with the perception of how fairly call pay is approached by administration.

3. Small and midsize markets will continue to need to address the issues of paying for call as large market alternatives will not prove to be cost effective or abundantly available.

4. The relative value of the burden of call should be taken into consideration. Most ER Physicians will say that the most important specialty is the one that they need and not necessarily the ones that are being paid or demanding to be paid for call.

5. Demands to be paid must be considered in the context of what is legally permissible and reasonable. Paying physicians in response to demands without evaluating all relevant factors is potentially dangerous.


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