Why I Think The RVU System Sucks

From the title of this blog post alone, I think you know how I feel about RVUs. However, if you want to hear my reasoning, read on.

One of my biggest problems is that the RVU system is decided by a secret society composed of specialist. Nobody seems to have a problem that a “secret society” decides how much work and how much cost should be allocated to a medical service.

Medical procedures are very dangerous and have a lot of risk, but so is trying to provide healthcare to a complicated 2-year old that can’t tell you how she is feeling, where it hurts or if the medication is helping. Yet, RVUs don’t take into consideration that dealing with infants and children have a huge risk as well.

Second, the RVU system is “RELATIVE.” As in happiness is “relative.” Yet we somehow have bought into the notion that we are being fair with this made up “point” system.

RVU are meaningless unless they are attached to a dollar amount. In other words, you can’t take RVUs to the bank. At the end of the day, a private, independent practice, in order to survive has to have more money coming in to the practice than goes out, regardless of how well or how little RVUs they generate.

RVUs don’t reflect profitability. You can accumulate thousands of RVUs but it doesn’t mean you are making money.

I also don’t like the fact that RVUs change from year to year. Up until last year, vaccine admins didn’t have RVUs attach to them, yet managing and administering vaccines are very costly and can easily eat up a practice’s margins.

The only thing that makes a private doctor money, is seeing patients. Not accumulating RVUs. If you don’t treat patients, you are not accumulating RVUs, thus which one do you think is more important?

Let’s say you are opening a private practice and you are going to ask a bank for a loan. How many RVUs do you need to accumulate in order to pay for the expenses and have money left over to live on and pay the bank back? 5000 or 12,000 or 9,000 RVUs?

Who cares? The bank that is loaning you the money doesn’t care about the RVU. They wan’t to know how you will pay back the money. And like I said, what pays the bills are the patients you see. Not the RVUs you accumulate.

Speaking of cost, RVUs do a piss poor job of measuring what things really cost. Let’s say our practice is an expensive area where rent is more expensive or that I like to buy Apple products instead of Dell or that I prefer to have more RNs than Medical assistants.

How does the RVU system account for that? Oh, yeah, there is a index that that somebody came up with that we are supposed to multiply our RVUs so we can adjust for regions. Isn’t that cute.

As if cost for providing care is standardized among regions.

Supply and demand determine rent cost, not regions. I could go a couple of miles down the road and pay a different amount of rent than if I went down 5 miles down the road.

My point is that at the end of day, you have to have enough money, regardless of RVUs.

I also like to point out that even if you do decide to go with an RVU model, you still have to base it on a dollar figure. RVUs have to translate into dollars. So why not just stick with dollars?

Here is the bottom line for me. In my experience, I see docs lean on their RVUs without regard to “profits or cost.” Not in all instances of course, but in many cases, it can give doctors a false sense of productivity. A false assurance they are doing well in their practice.

I also think this mentality removes doctors from thinking in terms of cost and revenue. Since most doctors are uncomfortable talking about the money side of the business, the RVU is a perfect compromise for them. But it can be deadly.

Funny that doctors are the worst business people, and they are the only ones that embrace a point system, as opposed to dollars to measure productivity. Coincidence?

Before I get angry emails let me be clear.

Let me clarify… I’m not suggesting me dismiss the RVU concept entirely. I think it is important to understand how they work because this is how insurance companies decide how we get paid. What I disagree with, is using it as a measure of productivity for one’s practice.

3 thoughts on “Why I Think The RVU System Sucks”

  1. I agree that using RVUs as a sole or optimal productivity measure for a practice is not advised. You are right in that many docs lean on RVUs without thinking about profits or cost for their practice, which in the end is what they should be thinking about. However, while they aren’t necessarily a good productivity measure for the practice as a whole, I think RVUs can be a great productivity measure for individual *providers*. In most cases, even better than actual charges or collections. Let me explain.

    If you measure provider productivity by dollars charged or dollars collected, you can leave yourself open to payor mix discrepancies and other factors that can skew productivity. If one provider happens to see more Medicaid patients for example, he/she may generate less income for the practice but be just as productive as another provider who does just as many visits but happens to see fewer Medicaid patients. Measuring their production by RVUs removes this payor mix discrepancy and allows you to measure relative provider production equally. Using RVUs as a productivity measure can be more complex than using charges or collections (you need a system like PCC that has RVU calculations built in, otherwise a big ugly spreadsheet), so if you know the payor mix is pretty equal among the providers at your group, then using charges or collections may be a better choice for measuring productivity.

    At the risk of diverting on a somewhat different topic of compensation models, I think the real challenge is with measuring provider *value* to the practice as opposed to productivity. By measuring productivity by charges, collections, or even RVUs, a provider who sees a lot of infants and young patients may be more “productive” than a provider who spends more time with patients and specializes in dealing with ADHD kids or teenagers going through depression. But is the second provider who is less productive any less *valuable* to the practice? Maybe or maybe not. I think it depends on the practice and its vision and philosophy. But I think measuring real provider value to the practice is something to consider beyond measuring actual production.

    1. For a business with very, very low margins, I think it is dangerous to remove the payor mix discrepancy. By using the RVU as a measure of productivity, one is qualifying a doc as “productive” when in reality, they may or may not.

      This is like playing with fire.. the unintended consequences can give a practice a false sense security of “productivity” when in fact they may only be RVU rich but revenue poor.

      If you are revenue poor because of the payer mix, then that needs to be addressed and critical questions need to be asked, like: Can we afford to continue providing care for this payer’s customers?

      Now, value, as you pointed out, is the holy grail and it ought to definitely be considered from an ROI view point (both tangible and intangible).

      Thank you for your thoughtful response.

      Brandon

  2. I think you go to easy on RVUs. It is a horrible payment system as well, rooted in the bill more pay more mentality. Health insurance companies like it because it creates lots of room in secret provider contract negotiations. Physician led ACOs and Direct Primary Care practices at least correct for this.

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