Mercy faces backlash over physician pay standardization

Some physicians in the St. Louis, Missouri area are opting out of their employment contracts with the non-profit Catholic healthcare system Mercy over new efforts to standardize physician pay by linking them more directly to individual physician RVUs.

According to the Mercy website, Mercy Clinic Physicians currently number more than 2,100 and see patients at its hudreds of sites across four states, Arkansas, Kansas, Missouri and Oklahoma. Of the states, only one, Arkansas, has so far expanded Medicaid under the provisions of the Affordable Care Act, meaning that the bulk of Mercy’s 42 acute care and specialty hospitals and its 700 clinics and outpatient facilities are in non-Medicaid expansion states. According to the St. Louis Post-Dispatch, Mercy’s audited financial statements show that for the fiscal year ended June 30, 2013, Mercy had a 30 percent decrease in its operating income compared with the year prior due to rising costs. While Mercy’s total revenue grew by 6.5 percent to $4.4 billion, its total operating expenses grew by 7.5 percent to $4.3 billion in fiscal 2013.

Salaries and benefits are any healthcare provider’s largest source of costs, so standardizing pay and benefits across a large system is important. However, in Mercy’s case, the effort is leading some of its employed physicians to part ways with the sixth largest Catholic healthcare system in the United States, reports the St. Louis Post-Dispatch.

According to the newspaper, Gregory Finn, M.D., and his three physician colleagues at St. Louis’ Blue Fish Pediatrics, will no longer be employed by Mercy after Aug. 31, 2014, and will return to private practice. In addition, Allen Soffer, M.D., a cardiologist, and his St. Louis group will do the same.

While the numbers that have gone on record as leaving Mercy are small, Christopher Bowe, M.D., president of the rival physician organization for St. Anthony’s Medical Center, told the paper that he been contacted by a number of Mercy physicians looking to partner with his organization in recent months.

Losing physicians that help drive revenue is painful, but Mercy may have little choice.