Is an RVU-Based Bonus Structure Fair?

How do you know if your bonus measures up?

According to the Physicians Thrive Compensation Report 2024, physicians continued to see significant bonuses in 2023 in both primary care and specialties, with the average signing bonus for physicians reaching $37,473 — a 20% increase from 2022. Navigating bonus opportunities requires understanding different types of bonus structures and their impact on earnings. This article will break down the different types of bonuses and average payouts earned by different specialties.

Bonus structures for physicians

Bonuses for physicians are often calculated based on the monetary value the physician has added to the practice or organization. Here is the breakdown illustrating the types of physician bonuses as outlined in the Physicians Thrive 2024 Compensation Report:

• RVU-based (Relative Value Units): 59% (down from 70% last year)
• Quality of Care: 25% (down from 26% last year)
• Net Collections: 20% (up from 18% last year)
• Patient Encounters: 5% (down from 9% last year)
• Gross Billings: 1% (down from 3% last year)

These percentages indicate a shift towards RVU and net collections-based bonuses while the quality of care and patient encounters are becoming less significant.

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RVU-based bonuses, which are the most common incentive structure for physicians, link compensation directly to the volume and complexity of services provided. This system assigns a value to each medical service or procedure, reflecting the resources and effort required. Physicians earn bonuses based on the total RVUs they accumulate. RVU bonuses are incentives explained during the hiring process and written into physician contracts to promote productivity and efficiency.

As healthcare systems evolve, many physicians are striving to balance productivity incentives with quality-based metrics to ensure comprehensive and effective patient care. Still, the most common way for physicians to earn a bonus is by increasing the organization's earnings.

Top bonuses by specialty

For top-earning specialties like orthopedics and cardiology, bonuses have the potential to significantly increase physicians' annual compensation. Here’s a look at the highest-paid specialties in terms of incentive bonuses according to the same report:

• Orthopedics/Orthopedic Surgery: $134k (up from $126k last year)
• Cardiology: $88k (up from $85k last year)
• Radiology: $80k (up from $66k last year)
• General Surgery: $75k (up from $46k last year)
• Anesthesiology: $68k (same as last year)
• OB/GYN: $57k (up from $49k last year)
• Psychiatry: $37k (up from $35k last year)
• Family Medicine: $34k (up from $30k last year)
• Internal Medicine: $33k (up from $29k last year)
• Pediatrics: $31k (up from $28k last year)

According to the Physicians Thrive Compensation Report, physicians say they are putting in more hours and effort than ever to actually hit the metrics that trigger their incentive bonuses. In 2023, 57% of specialists reported getting a bonus. For primary care physicians, 53% earned an average bonus of $31k.

Lower bonuses by speciality

While some specialties saw significant increases in incentive bonuses, one specialty in particular experienced a decline: emergency medicine. This could be for the following reasons:

• Shift in bonus structures: There has been a shift towards RVU and net collections-based bonuses. These metrics might be less favorable for emergency medicine, where the nature of the work involves handling a high volume of unpredictable and varied cases rather than pre-planned procedures.
• Economic pressures: Many healthcare systems are facing financial challenges, leading to tighter budgets and reduced bonus pools. Emergency departments, which often operate at a loss due to the high number of uninsured or underinsured patients, may be more affected by these budget cuts.
• Changes in patient volume: The COVID-19 pandemic significantly impacted patient volume in emergency departments. While the initial surge increased workload, subsequent waves and changing public health policies could have led to fluctuations in patient numbers, impacting revenue and, consequently, bonuses.
• Burnout and staffing issues: Emergency medicine has one of the highest burnout rates among medical specialties. High turnover and staffing challenges can strain department resources, affecting overall productivity and bonus allocation.
• Cost-cutting measures: Healthcare organizations may have implemented cost-cutting measures to manage financial strain, affecting bonuses across various departments, including emergency medicine.

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