Practice Management Pearls

STS News, Summer 2012 --

Surgeon Productivity: Are RVUs the End All, Be All?
By V. Seenu Reddy, MD, MBA, and Ben Johnston, MBA

Cardiothoracic surgeons are approaching the 50 percent threshold of hospital employment in the United States. The interactions of becoming and staying employed involve some form of valuation of productivity as part of every contract negotiation. The use of the relative value unit (RVU) as such a measure is somewhat prosaic for the case mix of contemporary cardiac surgery, but it is what we have for now. V. Seenu Reddy, MD, MBA, of Nashville, and Ben Johnston of St. Petersburg, Fla., provide us with an eloquent refresher on RVUs and what they mean in current practice. As our specialty evolves with hybrid technologies and augmented case complexity, and as surgeons grapple with the added non-clinical administrative responsibilities of quality initiatives, perhaps we are entering a time where the RVU system may need to evolve as well. --  Vinay Badhwar, MD, Chair, Workforce on Practice Management

As many cardiothoracic surgeons are acutely aware, the trend in the United States over the past several years has been toward physician employment. In this model, typically a hospital, but sometimes a large physician organization or academic institution, employs the physician at a specified salary level, often with productivity measures and targets.

The typical unit of measure for productivity is the relative value unit (RVU). The origin of the RVU goes back to the Resource Based Relative Value Scale (RBRVS). The RBRVS was created as part of a study conducted at Harvard in the late 1980s and was implemented in 1992 as part of the Omnibus Budget Reconciliation Act that revalued services covered by Medicare. The underlying basis of all CMS payments is the original RBRVS that has been continually updated by the American Medical Association.

The RBRVS system assigns procedures a relative value for each service and adjusts this based on geographic region to account for the relative cost differential in varying parts of the country. This value is then multiplied by a fixed conversion factor, changed annually to allow for budget neutrality, to determine the actual payment a physician receives for the relative value of the service. Incorporated into the RBRVS system are three basic factors: physician work (52 percent), practice expense (44 percent), and malpractice expense (4 percent).

Medical procedures and activities are described by the AMA’s Common Procedural Terminology (CPT) manual where each numerical code has an underlying RVU and is paid out at a rate determined by the geographic locale and physician’s practice setting. CMS revises the RVUs each year for various CPT codes on a rolling basis with input from the AMA/Specialty Society Relative Value Update Committee (RUC).

In order to determine how many RVUs are associated with the CPT codes that represent the most common procedures you or your group performs, it is necessary to review the CMS Physician Fee Schedule on the CMS website; it is specific to region and year. Of the breakdown between physician work, practice expense, and malpractice expense, physician work RVUs are most commonly used to measure physician productivity.

Despite the somewhat convoluted nature of what has been described above, RVU-based productivity has been found to be the most reliable way to compare physician work efforts both across practices, between practices, and between geographic locales. There are, of course, significant shortcomings. Procedure-based specialties and “high value” procedures may create distortions in the number of work RVUs despite the fact that a primary care physician may be working the same number or more actual hours in a day. This is usually normalized by indexing the work RVUs by specialty, subspecialty (e.g., cardiac vs. thoracic vs. congenital), geographic locale (urban, suburban, or rural, as well region of the country), and practice setting (academic, community, or urban tertiary hospital).

A potential solution may be to utilize a normalizing measure, such as a work RVU (wRVU). The benefit of a wRVU is that it allows for physicians who either perform more extensive or complex operations, see more complex cases, or spend more time in consultations to capture this work relative to those physicians who may see less complicated cases or do numerous but less rigorous procedures (e.g., straightforward CABG vs. a complex ascending and aortic arch reconstruction). The caveat, of course, is that wRVUs are not the final measure of productivity and do not capture such important and often critical activities such as resident education, committee work, or clinical research. It is frequently necessary for organizations to create and assign values to these activities that translate into wRVUs to be measured.

While wRVUs are the current tool for physician productivity measurement in the clinical arena, a more complete productivity measurement would capture the sum total of a physician’s contribution.