Intermountain Healthcare Case Analysis

MEMO

To: Dr. Laura MacLeod
From: Nicholas Hill
Date: February 24, 2013
Subject: PHYSICIAN COMPENSATION

Enclosed is a formal report on physician compensation. Intermountain Healthcare is in the process of deciding if changing how physicians are compensated is pertinent to improving Intermountain Healthcare’s motto of, “extraordinary care” and financial wellbeing.
This report describes how Intermountain Healthcare is looking at using the government enacted Stark regulation system. This system uses RVUs (relative value units) in determining compensation for individual physicians. The report will go over why the Stark regulations were created and how RVU’s are utilized within the system. The report also includes a questionnaire
Intermountain Healthcare, now to be referred to as IHC, desires to provide extraordinary care to each patient who visits an IHC physician. Because of IHC’s goals as a company, it is only appropriate that they strive to employ physicians that practice extraordinary care for the patients gain, not the physicians own personal financial gain.
Problem and Research Questions
The purpose of this report is to determine whether adopting the federal government’s Stark regulations is beneficial to IHC’s goals as a company. Grant Davis, Financial Director of IHC, was provided a questionnaire regarding IHC’s stance on Stark regulations. The questionnaire questions are provided in (Appendix A).
Procedures
Information collected will be gathered from secondary sources such as scholarly articles, and government research documents. A questionnaire will be given to Grant Davis, the financial director of IHC. The research collected will help IHC determine whether or not to adopt the federal government’s Stark regulations. The findings from these sources are as follows:

Presentation of Findings
Stark Regulation
We have established a play scale for each individual doctor to determine their compensation based on their credentials and qualifications. 2. Would it be difficult for IHC to change their current compensation practices? Why or why not?
I feel that it is necessary for IHC to move towards a new form of physician compensation. The transition to a new form of physician compensation, such as the Stark regulations, will be difficult and costly initially. The main difficulty will be the amount of research involved in establishing a new pay scale conforming to Stark regulations. 3. What benefits would IHC reap from adopting Stark regulations?
IHC would reap many benefits by adopting Stark regulations. IHC’s reputation for extraordinary care would increase because the Stark regulations would encourage doctors to make decisions in the best interest of the patient, since the compensation factor will be influenced by the quality of care given. Doctors won’t prescribe unnecessary treatments or medications because their compensation won’t be affected by this. Also time used to calculate compensations will decrease once the pay scale is set up with Stark regulations and RVUs because of the formulas