APP Compensation Programs Shifting to Address Growing Market Demand and Changing Models of Care
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February 4, 2020 – Chicago –SullivanCotter, the nation’s leading independent consulting firm in the assessment and development of rewards programs and workforce solutions for the health care industry and not-for-profit sector, recently released survey results indicating that advanced practice provider (APP) compensation programs continue to evolve as organizations recognize the roles APPs play in helping to achieve key organizational goals.
There are a number of key factors driving this shift in APP compensation and pay practices, including (1) the increased integration and utilization of APPs to help enhance access, quality, service and affordability in a value-based health care environment; (2) a need for APPs amidst a growing physician shortage; (3) clinical integration and new team-based models of care, which suggest a potential need for greater alignment between physician and APP rewards strategies and; (4) the rising prevalence of APP leadership positions and structures to support the effective management of this rapidly expanding workforce. Many organizations are restructuring their pay programs accordingly as ongoing challenges in recruiting, retaining and engaging key APP talent requires a more competitive approach to compensation.
APPs are currently among the fastest growing segments of the health care workforce and, on average, comprise more than one-third of an organization’s clinical providers.i As APPs move beyond traditional inpatient and outpatient settings, this growth is driven in part by increased utilization in new and/or emerging practice settings such as urgent care, retail-based and skilled nursing. An analysis of results from SullivanCotter’s 2019 Advanced Practice Provider Compensation and Pay Practices Survey confirms the demand for APPs as participating organizations reported significant growth in this workforce. In fact, this growth exceeded yearly estimates by 7%. Similarly, actual increases in base pay continue to outpace expectations. In 2018, the projected average increase was 3.2% compared with an actual average increase of 4.8%. The actual average increase in 2019 was 4%, which is slightly higher than what was projected.
“The strong demand for APPs continues to be a significant trend and can place added pressure on an organization’s staffing budget. Actual increases in base pay have been consistently outpacing projections for the past five years, and health care organizations must be mindful of the impact this can have on the bottom line – especially if APPs make up a significant portion of your overall workforce,” said Amy Noecker, Principal, SullivanCotter.
As with physicians, APP compensation is evolving to reflect differences between major specialty categories – primary care, medical, surgical and hospital-based. While all categories have seen increases in combined nurse practitioner and physician assistant median total cash compensation (TCC, equal to base salary plus annual incentives) from 2017 to 2019, medical and hospital-based rates have seen the most growth at 5.3% and 5.0%, respectively. Primary care, up 4.6%, and surgical, up 4.4%, follow closely behind.
Additionally, incentives are becoming a component of APP total cash compensation as rewards strategies continue to evolve. Nearly half of participating organizations, at 48%, report utilizing incentive pay for at least some of their APPs. While this prevalence has remained steady year over year, median annual incentive amounts have increased across all specialty categories from 2018-2019. Despite having the lowest overall TCC rates, primary care APPs continue to have the highest reported median annual incentive amounts in 2019 expressed as both a dollar amount, $7,701, and as a percentage of base salary, 6.9%. As in past years, these incentive opportunities are predominantly structured as add-on dollars, 73%, rather than at-risk, 15%.
Clinical integration and the focus on new team-based models of care are also driving the evolution of APP compensation programs. “Although there are still some important differences in the design of physician and APP compensation programs, aligning rewards more closely to ensure complementary versus competitive team-based care delivery is important. As organizations look to establish and reinforce a clinical team-based mindset, many are considering a strategic restructuring of their APP compensation plans to reflect certain elements of physician pay programs,” said Trish Anen, Principal and APP Workforce Practice Leader, SullivanCotter.
In 2019, 32% of APP incentive programs contained a team-based component. This prevalence has increased by 5% since 2017. Based on survey responses, most APP incentive plans are relatively simple, with 64% of organizations utilizing just one or two metrics. The most prevalent metrics selected in all practice settings are work RVUs, value/quality-based and patient experience. In an effort to better understand and track impact, the interest in APP productivity continues to grow as more organizations collect and report this information. From 2017-2019, there was a substantial 66% increase in the amount of reported work RVU data and a 26% increase in patient visit data.
Lastly, APP leadership compensation continues to evolve as organizations develop new positions and outline key responsibilities to effectively support the management of this growing workforce. As a result, a clear structure of leadership roles has solidified. In 2019, 58% of organizations reported having designated APP leaders. Of these organizations, 26% utilize a top APP leader. This typically represents one or two leaders dedicated to developing the overall APP workforce strategy. Annual TCC for these top APP leader positions falls between $155,527 and $212,850 (25th-75th percentile) and tends to correlate with the number of employed APPs.
SullivanCotter’s 2019 Advanced Practice Provider Compensation and Pay Practices Survey Report is now in its 8th year. With data from more than 560 organizations on nearly 74,000 individual APPs, this survey provides critical information on physician assistants, nurse practitioners and other certified providers across 127 different specialties. The survey includes insight into base salary, TCC, productivity, incentive plan design and other pay practices such as extra shifts, on-call pay, shift differentials, recruitment and retention bonuses, and more. For more information on SullivanCotter’s surveys, please visit our website at www.sullivancotter.com or contact us by phone at 888.739.7039.
Don’t miss your chance to participate! The 2020 Advanced Practice Provider Compensation and Pay Practices Survey is now open for submission.
About SullivanCotter
SullivanCotter partners with health care and other not-for-profit organizations to understand what drives performance and improve outcomes through the development and implementation of integrated workforce strategies. Using our time-tested methodologies and industry-leading research and information, we provide data-driven insights and expertise to help organizations align business strategy and performance objectives – enabling our clients to deliver on their mission, vision and values.