Emergency department visits are on the rise. Unfortunately, stipends for ED call panel specialists are rising, too – and show no sign of slowing down. According to published reports, the cost of stipends is increasing at a rate of 14% every year. These significant increases in cost and demand make it clear: stipends alone are not a sustainable way for emergency departments to ensure specialty coverage.

Thankfully, there’s a better way to maintain healthy call panels. This alternative is more cost-effective for hospitals and more equitable for call panel physicians. It gives hospitals access to a broader pool of skilled specialists willing to support their emergency departments. And it ensures that these specialists are fairly compensated for the life-saving care they provide.

The solution is performance-based compensation. When combined with capped or reduced daily stipend levels, performance-based compensation is far superior to a stipend-only approach. To see why, let’s first review the limitations of the stipend-only model.

The Limitations of a Stipend-Only Model

From a physician’s perspective, a daily stipend has to be enough to compensate for the entire burden of taking call. Call burden is typically defined by six factors:

• How often the physician is on call
• Number of telephone calls per night
• Number of trips to the hospital per night
• Acuity level of the patients needing treatment
• Payer mix (representing reimbursement risk to the physician)
• Impact on private practice and personal life

Call panel specialists are also looking to protect themselves financially from the worst-case scenario: the “train-wreck” patient. This is an acutely-ill unfunded patient requiring a complex surgical procedure, possibly with post-op complications, and potentially months of ongoing care. It’s easy to understand why a physician would see a single-day stipend payment as insufficient reimbursement in a case like this.

Even though the “train-wreck” scenario is the exception rather than the rule, it is frequently cited when call panel specialists renegotiate their stipends. Looking to cover both the worst-case scenario and the entirety of call burden, specialists naturally negotiate for higher stipends – and are seldom willing to compromise. Absent any creative alternative, and facing ever-present EMTALA requirements, hospitals have little choice but to concede these higher stipends. So, year after year, stipend costs continue to rise.

The problem is stipends have become the primary source of payment for the entirety of the call burden. While they are a reasonable way to compensate specialists for the inconvenience of being on call, stipends are an ineffective way to compensate those specialists for the actual work they perform. They’re too rigid to account for the volume and variability of that work.

What’s needed is a flexible payment model that can be combined with capped or reduced daily stipends. What’s needed is performance-based compensation.

The Logic of Performance-Based Compensation

In a performance-based compensation program managed by EA Health, physicians receive timely fee-for-service (FFS) payment, at fair market value, for medical services rendered to eligible patients. They avoid the expense and hassle of billing and collecting for their own services, and also avoid any risk of non-payment when they treat unfunded patients.

For hospitals, performance-based call compensation can considerably lower fixed costs. With the stipend-only model, hospitals are committed to a significant daily physician expense, regardless of the number of patients seen or services provided. By contrast, performance-based compensation costs fluctuate with patient and service volume. Lower volume translates into lower compensation costs.

If a hospital is seeking a substantial reduction in stipend costs, performance-based compensation rates can be increased to facilitate those reductions. In some cases, stipends for seldom activated specialties can be eliminated altogether if the FFS rates are set high enough. The flexible nature of performance-based compensation makes these stipend reductions possible.

For physicians, performance-based compensation is both intuitive and equitable. If a specialist is called in more often, performs more procedures, or has more complicated cases, he/she earns more. For those specialties where the call burden is greater due to fewer available physicians on the panel, hospitals can include an activation fee and/or pay a higher reimbursement rate to that specialty. With performance-based compensation, reimbursement for each specialty can be fine-tuned according to individual circumstances.

The Takeaway

Performance-based compensation is more than just an answer to the rising cost of stipends. It’s a financially sensible long-term solution that benefits both hospitals and physicians by shifting the emphasis from fixed-rate to FFS reimbursement. In this blended model, the stipend addresses the inconvenience of being on call, while the FFS payment compensates the specialist for the actual services provided. Performance-based compensation encourages more specialists to support their emergency departments. And when specialty call panels are adequately staffed with high-quality physicians, patient care is improved and more lives are saved.