This one metric can make or break any doctor's career

By Charlie Williams
Published August 10, 2020

Key Takeaways

What makes the ideal physician? Depends on who you ask. Most patients might say the ideal doc is one who listens closely, is trustworthy, and makes them feel better. Physicians themselves might point to a doctor who has an unwavering commitment to improving their craft, a deep passion for helping patients, and the desire to lift up and educate their peers.

All of these traits and characteristics are important, but there’s just one problem (and it’s a big one): They’re almost impossible to measure. A doctor’s trustworthiness or passion doesn’t fit comfortably into a spreadsheet. But do you know what does? Dollars.

In the fee-for-service world, the American healthcare industry measures physicians by finances. As more doctors become employees of large health systems (in 2018, 47.4% of doctors were employed while 45.9% owned their own practices), they’re increasingly at the mercy of healthcare administrators, whose jobs typically have less to do with improving patient care than improving their hospital’s bottom line. Even physicians who practice independently are beholden to the insurance companies who reimburse them for their work. To sum it up, it’s becoming increasingly clear that American healthcare’s golden metric is money.

What should career-minded physicians do if they want to put their best foot forward and stride toward success in this money-minded world? Focus on the one metric that can make or break any physician’s career: the Relative Value Unit (RVU).

What are RVUs?

RVUs were created by Harvard economics professor Bill Hsiao, PhD, in the late 1980s. The big idea? This metric could be used to place “relative value” on the effort that’s required for physicians and other clinicians to provide care to patients. Performing heart bypass surgery requires much more relative risk and expertise than administering a flu shot, for instance. So, a heart bypass surgery holds much more “relative value” than a flu shot, and is assigned more RVUs.

Over time, RVUs have evolved into much more than a tool used to measure physician activities. Here’s how it happened.

In 1990, to reign in rapidly rising medical costs, the US Congress instituted two major changes to the Medicare program: a fee schedule and a payment update system for physicians’ services. The aim of the fee schedule was to establish payment rates that would reflect the time, effort, and expense of providing a service. But, who could figure out these rates for the thousands of services that physicians perform?

In 1991, the American Medical Association (AMA) created the Relative Value Scale Update Committee (RUC) to make recommendations about the relative value of physician work for Medicare and Medicaid beneficiaries. The RUC, a group of multi-specialty physicians with insight into what it takes to perform physician activities, made their recommendations based on the CPT codes associated with each activity.

About a year after the RUC’s launch, Medicare began using the RUC’s recommendations for RVUs to determine how they reimbursed hospitals and physicians. Soon after, commercial and government payers followed suit.

Suddenly, RVUs had evolved from a way to place value on physician activities into a way to determine how hospitals and physicians were paid. In the process, they became the primary tool used to measure physician performance. The more RVUs physicians could produce, the more money they would earn for themselves and/or their health system, and the more successful they were determined to be.

How can physicians increase their RVUs?

If the formula for physician success looks something like More RVUs=More Money=More Success, the short answer to this question is to do more—more procedures, more surgeries, more patient visits, etc. Each one of these activities racks up RVUs in the fee-for-service model of healthcare, and allows health systems and even independent physicians to collect more reimbursements along the way.

The long answer is that it’s not so simple to just do more, and medical experts aren’t even sure if all that extra activity leads to better healthcare. “Assessing physician performance by RVUs monetizes the patient-physician relationship and incentivizes more, and not necessarily better, care. This focus can lead to higher costs for both payers and the healthcare system,” wrote two Cedars-Sinai researchers in a JAMA editorial. “Further, the way that RVUs are calculated tends to deemphasize primary care, population health, and public health and tends to favor procedural specialties.”

There’s a lot to unpack in that brief quote. First, monetizing the patient-physician relationship can make it more difficult for physicians to connect with and help patients, which is the primary reason most of them decide to pursue careers in medicine.

Secondly, incentivizing physicians to do more activities with little emphasis on the quality of those activities is a strong contributor to physician burnout (recent studies suggest that between 40% and 46% of physicians are burned out). What’s more, it’s possible that pushing physicians beyond their limits is backfiring economically, too. Burnout costs the US healthcare industry roughly $4.6 billion each year, an amount that’s mostly attributable to high turnover rates and decreased productivity, according to a study published in the Annals of Internal Medicine.

Finally, deemphasizing primary care, population health, and public health is resulting in massive gaps in care for an aging US population and has left us ill-equipped to handle the increasing burden of the coronavirus pandemic.

To combat burnout, health systems are encouraging doctors to practice resilience—in other words, they want physicians to get better at bearing the burden of increasing demands, rather than decreasing the burden that’s causing the burnout. News stories proclaim the latest breakthrough solutions to this problem, like installing nap pods in hospitals or encouraging doctors to use meditation apps or practice yoga. But these purported solutions, although well intentioned, seem to ignore the fact that physicians are already pretty darn tough. A recent study in JAMA Network Open found that physicians are more resilient than the average American worker.

Pros and cons of pay-for-performance

Administrators have heard the complaints against the “more is better” fee-for-service model, so in the last decade healthcare facilities have been shifting to a pay-for-performance structure (also called value-based care). The pay-for-performance approach stresses quality over quantity of care and allows healthcare payers to financially encourage clinical practices that they believe promote better patient health outcomes. Quality metrics are publicly reported, which encourages accountability.

But downsides remain. Some criticisms of the pay-for-performance system indicate that it reduces access for socioeconomically disadvantaged groups because physicians who treat a larger share of low-income patients tend to perform worse on pay-for-performance measures and are thus disincentivized from treating these patients.

The pay-for-performance model has also been shown to reduce job satisfaction because it incentivizes physicians to game the system in order to meet its metrics. In addition, because many patients receive care from multiple providers, accurately attributing performance outcomes to the appropriate provider can be a complicated task.

RVUs are still important

Regardless of the progress of pay-for-performance, the fee-for-service model is still fully entrenched in the healthcare payment system. For instance, about 39% of healthcare payments made in 2018 were still traditional fee-for-service (not linked to quality or value), while only about 25% were pay-for-performance or value-based care payments. The remaining 36% were tied to a bundled payment model, shared savings contract, population-based payment model, or another alternative payment model, according to a report from the Health Care Payment Learning & Action Network.

In other words, RVUs are still a very meaningful metric for most physicians. As physicians navigate their careers, it’s a good idea to keep RVU production in mind.

But it’s also important to remember that there’s certainly more to medicine than money. The most satisfied physicians keep one eye on the requirements of their reimbursement system and the other eye on their commitment to helping patients live healthier lives.

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