How to Measure Practice Productivity Using Relative Value Units (RVUs)

Practices also should look at such aspects as each practitioner’s caseload and reimbursements.
Practices also should look at such aspects as each practitioner’s caseload and reimbursements.

Whether in a small, independent practice where the doctors “eat what they kill” or a large group owned by a hospital, it is important to know the productivity of the providers.

For some time, relative value units (RVUs) have been the key way to measure productivity, but they can also be used to gain a better understanding of the practice on the whole. Some experts say groups should look beyond RVUs to other measurements as well.

RVUs

RVUs are a marker created by the Centers for Medicare and Medicaid Services to measure the productivity of physicians. An RVU is tabulated for CPT codes by calculating things like the time it takes for an office visit or procedure and the technical skill and training needed to perform a service. Geographical differences are also taken into account.

“Work RVUs certainly aren't perfect, but they are still the only systematic way to measure a doctor's work,” said Jimmy Burnett, a director with Navigant Healthcare's Physician Performance Improvement Practice.

Both small and large practices can be using RVUs for various reasons, Burnett said. Large groups likely use these numbers to create compensation packages. But small groups can use them when negotiating managed care contracts. They can look at an RVU for a procedure and find out if all of their payers are reimbursing enough for the treatment. If not, they can use that as a starting point for contract negotiations.

RVUs can also be used to determine the capacity of an organization that might be considering expansion, said Ric Perry, also a director with Navigant. Perry said that RVUs are an objective way to understand how much work physicians should be doing and how much is done in the practice overall. If there is a discrepancy, it may be time to hire another physician to handle some of the load.

If a small group is considering selling to a hospital or negotiating as part of an Accountable Care Organization, RVUs are a good bargaining tool in those discussions, said William Allen, executive medical director of the health solutions practice at FTI Consulting. Proving the group has a high productivity level is invaluable in contract negotiations.

While RVUs are valuable in the fee-for-service world, Allen said, they may also be useful as the system moves toward paying for quality as well. One way quality is determined is by the amount of good care delivered per dollar spent. Value can also be highlighted if the quality and productivity measures align.

Other measurements

Tom Ferkovic, managing director of SS&G Healthcare, said RVUs are a good way to measure productivity, but offices can also use simple measures like collections per doctor or number of patients seen.

“The most important thing to determine about what to measure is how the practice makes money,” Ferkovic said. “What are the key indicators that will make you successful?”

A urology practice's success, for instance, may be driven by surgical procedures. It would be good to know then, the surgical yield: how many patients have to be seen to get a patient who needs a procedure. A goal could be to lower that number. If a physician has to see 8 patients for every one surgery, a goal can be set to reduce it to 4 patients for every 1 procedure.

Another important measurement to understand is whether or not physicians are bringing in new patients and doing new procedures to make sure they are helping the practice grow. It also is important to know how physicians are using the group's resources.

“You can have someone with a lot of revenue who is also eating up a lot of expense, so that's not good either,” he said. “None of this should be looked at in a vacuum.”

One measurement that the most successful practices use is denial percentages, Ferkovic said. This is something that not all groups evaluate, but they should, he said.

“If you are tracking RVUs, you have to see if they are reimbursed,” he said. “If claims are denied, they will get credit for those, but not get paid.”

Ferkovic also offered 2 important points relevant to any kind of measurement. The measurement has to provide information in an extremely timely manner and it should not take hours to put together. The data should be fairly easy for the staff to obtain and evaluate.

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