Physician fee management: KPIs and control
Physician fees are one of a hospital's largest variable costs. Measuring them well is what allows fair rules for both sides.
Physician fees ("repasse médico" in Brazil) are the amounts a hospital pays physicians for the encounters and procedures they perform. In many hospitals, they are among the largest costs of care, alongside supplies and drugs. Controlling physician fees does not mean cutting physician pay; it means making sure rules are clear, applied consistently and coherent with what the hospital receives.
The most common pay models
| Model | How it works | Nature of the cost |
|---|---|---|
| Fee for service | Percentage or amount per procedure performed | Variable |
| On-duty hours | Amount per hour of presence | Fixed for the period |
| On-call | Amount for availability, whether or not called in | Fixed for the period, with a variable part |
| Package or fixed monthly fee | Amount contracted per service or specialty | Fixed |
Many hospitals combine several models. For management, the key is to separate what is variable (part of contribution margin) from what is fixed (structure).
The KPIs
- Total physician fees for the month, by pay model, specialty and physician.
- Physician fee ticket: fees ÷ number of encounters, by encounter type. See hospital average ticket.
- Fees as a share of revenue: how much of each payer's and specialty's billing goes to physician fees.
- Fees on denied accounts: does the hospital pay the physician for a procedure whose account was denied? The rule needs to be defined.
- Timing: when fees are paid (at production, at billing or at collection) and the effect on cash.
Points of attention
- Fees higher than revenue on certain procedures or payers: this happens when the payer's table does not keep up with the pay rule.
- Different rules for identical cases: old contracts, undocumented exceptions.
- Fees on gross or net value: paying on billed value, before denials, transfers the denial risk to the hospital.
- On-duty and on-call shifts without matching volume: the fixed cost of availability needs to be compared with actual use.
Physician fees and margin
Fee-for-service pay is one of the components of contribution margin by payer. A payer with high revenue can have a low margin if the fees for its most frequent procedures are high relative to the table. Analysis by specialty and procedure shows where to adjust.
How BI helps
BI brings volume, billing, denials and physician fees together, by physician, specialty and payer, and shows the trend. In Clic Health, the Physician Fee Management, Physician Impact and Medical Cost Calculation dashboards track medical costs (fees, on-duty hours, on-call and volume), and the Revenue Tickets dashboard shows the physician fee ticket. See also hospital controllership.
Related questions
Are physician fees a variable or fixed cost?
It depends on the model. Fee for service is variable; on-duty, on-call and fixed monthly amounts are fixed costs for the period.
Should fees be paid before or after the payer pays?
It is a contractual decision. Paying after collection reduces the hospital's cash risk; paying at production is more attractive to physicians. What matters is that the rule is clear and the same for everyone.
How should fees on denied procedures be handled?
Define in the contract whether fees follow the denial (reversed or suspended until the appeal) or not. Without a rule, the hospital bears the risk alone.
Written by the team behind Clic Health: accountants, controllers and developers with more than 20 years of work in hospital management.