Physician productivity is an integral part of many compensation systems for both employed physicians and physician owners in group practices, yet it seems not everyone has a clear understanding about how productivity measures work. This article will help you better understand the productivity measures in common use today, their limitations and the variables affecting them.

What is physician productivity?

In simplest terms, physician “productivity” is a measure of a physician’s work or output. A physician is considered more productive when he or she generates greater results according to the measure used. For example, a physician who sees 10 patients is more productive than a physician who sees five patients, if the chosen measure of productivity is patient volume.

Productivity becomes a measure of efficiency when it includes a common unit of input, such as time. Thus, if one physician sees 10 patients in two hours and the other physician sees five patients in an hour, they are equally efficient, since they both see the same number of patients per hour.

Productivity and efficiency are distinct from quality and service. For example, if the physician who sees 10 patients in two hours does so in such a way that patients leaving the office feel that none of their concerns were addressed, that physician may be very productive and efficient, but he’s not really doing a good job.

Traditional measurements

One way productivity has traditionally been measured is by the number and types of patient encounters (e.g., office visits). However, since the number and types of patient encounters say nothing about a physician’s efficiency, this measure is often accompanied by measures of time too. Combining patient encounters with measures of time allows efficiency (e.g., patients seen per hour) as well as productivity to be measured. Measures of time and patient encounters are of limited use because every office visit or block of time spent with a patient is not the same.

Another measure of physician productivity is dollars generated to a practice. This was traditionally measured by charges for services rendered. However, with the prevalence of discounted fee-for-service, collections may be a more accurate measure of dollars generated. Using collections as a measure of productivity is limited, because while it may accurately reflect dollars generated, it is highly dependent on the patient’s type of insurance coverage. For example, two physicians providing the same services may generate entirely different collections for the practice depending on the payer mix of their patients.

More recent measurements

The use of relative value units (RVUs) as a measure of physician productivity appears to be growing. Work RVU are numbers assigned to services that establish the differing amounts of physician work associated with them. For example, a service with a work RVU of “2” would be considered to involve twice as much physician work as a service with a work RVU of “1.”

The Resource-Based Relative Value Scale (RBRVS) used by Medicare and many other third-party payers is a common source of RVUs. Each CPT code is assigned a work RVU as well as RVUs for practice expenses and malpractice expenses. The work RVUs are intended to reflect the time required to perform the service; the technical skill, mental and physical effort and judgment involved; and the psychological stress associated with the physician’s concern about the iatrogenic risk to the patient.

An advantage of using RVUs to measure productivity is that they are independent of any dollar amounts. Two physicians providing the same service would generate the same RVUs, regardless of patients’ insurance or the physicians’ respective charge schedules. RVUs also take into account differences in the types of patient encounters and hours spent in patient care. One limitation of using RVUs is their dependence on accurate CPT coding. Productivity measures for physicians who code incorrectly don’t reflect the actual work they do. Further, RVUs, like traditional productivity measures, are geared toward a fee-for-service environment. They may not work as well in capitated and other environments where generating patient encounters and CPT codes is not the emphasis.

In these environments, panel size may be a more relevant indicator of productivity, but that depends on how the “panel” is defined. Typically, a physician’s panel is the number of patients who have either chosen or been assigned to the physician as their primary care physician. One limitation of panel size as a measure of productivity is that the physician may have little or no control over it. The physician does not control his or her panel size to the same extent he or she controls the number of patients seen, hours spent in direct patient care, etc.

Another limitation is that two panels of the same size may represent very different workloads for the physicians assigned to them. A panel of 2,000 elderly patients probably represents a much different challenge than a panel of 2,000 young adults. Consequently, risk adjustment is important if panel size is used to measure productivity. Despite its limitations, panel size as a measure of productivity may grow in importance and use as physicians redesign their practices and as population-based care becomes more prevalent.

Productivity and physician compensation

Productivity measures are commonly incorporated into physician compensation systems, in part because they are more objective than other measures of physician output, such as quality and service. However, to use a productivity measure successfully measure be well defined and that compensation be consistent with that definition. The productivity measures used should also reflect the compensation milieu. For example, in a fully capitated environment, measuring productivity in terms of patient encounters probably makes little sense. A compensation system that includes a productivity measure must also allow for improvements. Productivity goals that are impossibly high may have a negative effect on physician productivity.

Variables to consider

Many things can affect physician productivity, including individual physician characteristics. For example, older physicians tend to spend less time in direct patient care and more time per encounter than do younger physicians.^1,2 Full-time or part-time status can also have an impact. Part-time physicians spend fewer hours in direct patient care, and, as a result, tend to generate fewer charges than their full-time colleagues.³ Thus, in an absolute sense, they appear to be less productive, even though when adjusted based on a common unit of input (e.g., patients seen per hour), part-time physicians may be as or more efficient than their full-time colleagues.

Other physician characteristics that may impact productivity include personality and personal values. For example, a more outgoing physician may be less productive in terms of number of patient encounters than a less outgoing partner who doesn’t engage patients in conversation. Similarly, a physician who places greater value on time with his or her family may spend fewer hours in direct patient care than a colleague.

Patient characteristics and case mix also affect physician productivity. For example, older patients and new patients tend to generate lengthy encounters, decreasing the number of patients the physician can see without any commensurate increase in RVUs generated.² Finally, Medical Group Management Association data suggest that family physicians who do maternity care tend to generate more gross charges and more RVUs than family physicians who do not, although they tend to have fewer ambulatory encounters.³

No perfect measure

Although there are many well-defined measures of physician productivity, each has its own limitations. Being aware of these limitations and of the variables that can impact productivity measures is paramount for physicians whose productivity is being evaluated and for those administering a productivity-based system.