How Is Physician Production Calculated?

Understanding how physician production is calculated is crucial for any medical professional because it can determine your compensation, your ability to negotiate contracts, and even your ability to secure employment. 

Are you a physician who is curious about how your performance and physician productivity are measured? Or you’re considering starting a new practice and want to know how you will calculate your income.

In this blog post, we’ll simplify the complex physician production calculation method and provide an easy-to-understand explanation. We’ll examine the various production calculation techniques, the considerations, and how they impact your bottom line. 

Therefore, this piece is for you, whether you’re a rookie physician just starting or a seasoned veteran wishing to make a difference. Continue reading to learn more about how physician production is determined and how it may affect your career.


What Is Physician Productivity?

Physician productivity is a term used to describe how much money a doctor brings to a practice or hospital. It is a tool for assessing the effectiveness and performance of medical professionals and is used to decide on salary, negotiate contracts, and evaluate work performance.

Physician productivity metrics may be determined by considering the kinds of treatments or services rendered, the number of patients seen, the duration of the doctor’s contract, and the doctor’s expertise and credentials. 

It’s also significant to remember that factors other than medical output affect how much a doctor is paid. It is frequently determined by combining productivity with other elements, including experience, education, and the doctor’s position within the practice or organization.

Overall, physician productivity is a crucial statistic for any healthcare practice or organization since it aids in assessing the effectiveness and performance of doctors and is used to inform essential choices like pay, contracts, and job performance reviews.

How Is Physician Production Calculated?

The relative value of the services rendered by the doctor is the foundation of the RVU techniqueEach method or service is valued depending on the time, expertise, and resources needed to complete it. The physician’s revenue is then calculated by multiplying the total RVUs the physician generated by a conversion factor.

Similar to the RVU approach, the wRVU method additionally considers the physician’s labor effort, such as the number of patients seen or the number of procedures carried out. Since it considers the doctor’s real labor effort, this method is more accurate than the RVU method.

The physician’s net income, which is equal to their total revenue less their expenses, are considered when calculating physician productivity using the net income technique. This approach is the most accurate because it accounts for all expenses related to operating practice or rendering medical services.

Each of these approaches has advantages and disadvantages, and the way users will rely on the practice, healthcare system, or agreement between the participants. Physician productivity may be determined by considering the kinds of treatments or services rendered, the number of patients seen, the duration of the doctor’s contract, and the doctor’s expertise and credentials.

It’s important to remember that a doctor’s compensation is frequently based on a combination of productivity and other factors, including experience, credentials, and the doctor’s role within the practice or organization. Physician productivity is not the only factor that determines a doctor’s compensation.


RVU Technique

The relative value unit (RVU) technique is a method used to calculate the relative value of medical procedures and services provided by physicians. It’s often used to determine physician compensation percentage of collections and productivity and to set reimbursement rates for medical procedures.

Based on the time, expertise, and resources needed to complete an operation or service, a certain number of RVUs are assigned to each one. 

Several parameters, including the difficulty of the treatment, the time necessary, the number of patients seen, the number of procedures carried out, and the number of patients treated, are considered when determining these RVUs by a panel of experts.

The amount of money a doctor makes is determined by multiplying the total RVUs they generate by a conversion factor (set by the Centers for Medicare and Medicaid Services). The costs of providing the service, including the cost of labor and supplies, are considered by this conversion factor.

The RVU technique is one of the most popular ways to calculate physician compensation; however, it has come under fire for failing to account for the physician’s training and expertise and not offering enough financial incentives for doctors to accept complex or high-acuity patients.

It’s crucial to remember that the RVU approach is just one of the numerous tools used to estimate physician productivity and pay. It’s not the only element affecting a doctor’s income. It should be combined with other techniques and elements, such as patient satisfaction, clinical outcomes, and adherence to recommendations and best practices.

How Are Physicians Paid in a Productivity Model?

In a productivity-based model, physicians are typically paid based on the revenue they generate for the healthcare organization or practice. This model can include revenue from patient visits, procedures, and other services the physician provides.

How to calculate a physician’s salary? 

The productivity of the physician is then often measured to determine their salary. This can be in base pay, bonuses, or both. Some organizations may also consider productivity when considering a physician’s eligibility for benefits or other payment types.

It’s crucial to remember that productivity-based models can be debatable and have been accused of encouraging doctors to perform unnecessary operations while driving up healthcare expenditures. Furthermore, these models might not be appropriate for specialties focusing less on operations, like primary care.

How Do You Measure Physician Performance?

Clinical results, patient satisfaction, adherence to recommendations and standards of care, and other aspects of a physician’s work are all evaluated as part of the multifaceted process of evaluating physician performance. 

Here are a few typical techniques used to gauge medical professionals’ performance:

  1. Clinical Outcomes: As part of the comprehensive process of assessing physician performance, clinical outcomes, patient satisfaction, adherence to guidelines and standards of care, and other facets of the physician’s job are all examined. Here are a few typical methods for evaluating the performance of medical specialists:
  2. Patient Satisfaction: Patients’ happiness with the medical care they received is evaluated through surveys and questionnaires, considering elements like communication, empathy, and overall experience.
  3. Quality Metrics: Through surveys and questionnaires, patients’ satisfaction with the medical care they received is assessed while factoring in things like communication, empathy, and overall experience.
  4. Data Analytics: Physician performance is monitored, and areas for improvement are found using electronic health records and other data sources.
  5. Peer Review: This procedure entails the evaluation of physicians’ performance by their coworkers, who may check medical records, observe patient interactions, and offer feedback.
  6. Productivity: Through this process, a doctor’s performance is assessed by their coworkers, who may review patient records, monitor patient interactions, and provide feedback.

It’s crucial to remember that evaluating physician performance is a difficult process that must be carried out in a fair, impartial, and consistent manner while considering the complexity and diversity of patients, as well as the doctor’s area of expertise, into account. 

It must also be done to improve patient outcomes and care rather than just rating and disciplining doctors.

Physician Compensation Models

Several models are used to determine physician compensation, each with advantages and disadvantages. Some of the most common models include:

  1. Fee-for-service (FFS): The traditional payment method involves paying doctors for each service or surgery they provide. This concept is frequently criticized for driving up healthcare prices and can result in incentives for overusing medical procedures.
  2. Salary: In this system, doctors receive a set wage regardless of how many patients they visit or treatments they carry out. Physicians may benefit from this model’s stability and predictability, but it may need to account for individuals’ varying complexity and intensity.
  3. Capitation: For each patient on their panel, regardless of the number of treatments or procedures rendered, doctors are paid a predetermined sum under this arrangement. This model can encourage doctors to offer preventive care and manage chronic conditions. Still, it needed to provide more financial incentives to encourage doctors to accept challenging or high-acuity patients.
  4. Productivity-based: According to this approach, physicians’ pay is based on how productive they are as measured by the money they bring in for the hospital or medical practice. This model can include revenue from patient visits, procedures, and other services rendered by the doctor. This concept may encourage doctors to practice effectively and efficiently, but it also risks encouraging the misuse of medical treatments.
  5. Quality-based: Following this approach, doctors are paid according to how well they follow regulations and standards of care and how well their patients are treated clinically. Although this model can encourage doctors to deliver high-quality treatment, it can be challenging to measure and might not account for the complexity of patients or the doctor’s specialty.

It’s crucial to remember that physician remuneration frequently combines several distinct models, and the model relies on the office, the healthcare system, or the terms of the agreement between the parties. 

It should also be continuously evaluated and modified as necessary to ensure it complies with the objectives of the company and the evolving healthcare landscape.


Physician Compensation by Specialty

By specialty, physician pay varies, with some specialties paying considerably more than others. Physicians specializing in surgery typically make more money than those practicing primary care or non-surgical specialties. This situation frequently happens because surgical procedures demand more specific knowledge and training and tend to earn more money.

According to the Medical Group Management Association (MGMA), the highest-paying specialties in 2020 were:

  1. Orthopedic surgery: $622,653
  2. Cardiology (invasive): $566,097
  3. Dermatology: $529,361
  4. Gastroenterology: $498,081
  5. Radiation Oncology: $486,081
  6. Urology: $465,667
  7. Neurology (invasive): $463,947
  8. Anesthesiology: $457,974
  9. Otolaryngology: $449,455
  10. Cardiology (non-invasive): $439,114

On the other hand, the lowest-paying specialties in 2020 were:

  1. Pediatrics: $236,964
  2. Family Medicine: $241,273
  3. Internal Medicine: $252,042
  4. Psychiatry: $263,939
  5. Obstetrics and Gynecology: $273,287

It is important to remember that in addition to other elements like the size of the practice, the doctor’s expertise and credentials, and the doctor’s position within the practice or organization, physician pay also differs by region and location.

The choice of specialization should consider issues like work-life balance, the patient population, and possibilities for professional development in addition to compensation, which is only one facet of a doctor’s career.

For a deeper understanding of how physician productivity is calculated and the different factors affecting it, the American Medical Association is a valuable resource for physicians at every stage of their careers. Their work includes a variety of resources on physician compensation, productivity, and other key issues affecting doctors today.


About Us:

We are committed experts in the field of Physician Contract Review, proudly serving the medical community through our platform at Physician Contract Attorney. With a profound understanding of the healthcare industry’s complexities, we provide comprehensive contract review services tailored to meet the unique needs of physicians. Our team of experienced legal professionals is dedicated to ensuring that every aspect of your contract is clear, fair, and beneficial to your career. To learn more about our services or to book a review, please contact us today.

Scroll to Top