What revenue can ambulatory-based pediatricians expect to generate from fee-for-service productivity?
This spreadsheet can give you a back-of-the-envelope estimation based on hours worked, types of patients seen, payment rates, practice collection rate, and other variables. For a manipulable Excel version, download the Physician-Productivity-Worksheet.
Outpatient tab
1st row: Scheduling parameters
How many patient slots will you have in an a workday? In other words, how many possible different appointment slots will you offer during the day (whether or not they’re all filled) ? One way to think about it this would be a theoretical “maximum safe patients seen.”
What percent of these slots will be filled per day? Obviously, if you want to see an average of 20 patients per day, it’s impossible to achieve this with 20 appointment slots, i.e. your maximum number of appointments per day. Ambulatory pediatrics is seasonal; while you may have total appointment saturation during the winter months, May and June might be comparatively slow. The product of “how many patient slots will you have” and “what percent of these slots will be filled” should give you a reasonable number for “average patients seen per day.”
How many workdays per week will you see patients? Enter a fraction for any partial days (i.e. afternoon off, Saturday clinic, early morning or evening hours).
How many weeks a year will you work? Start with 52 and work backwards. Account for any vacation time, sick time, CME or advocacy time, maternity leave, etc. In addition, it’s wise to subtract 1-2 weeks per year for holidays, snow or bad weather days, or other scheduled clinic closures.
The calculation in this row, “Total encounters per year,” should be a fairly accurate representation of your total annual patient volume.
2nd row: Sick visit payment
Average 99213: Enter the average non-Medicaid payment you expect for CPT 99213. This should be a weighted average of higher- and lower-paying health plans. If you have no idea where to start, seeing what Medicare pays in your region could be a rough benchmark.
Average 99214: like “Average 99213.”
% 99214+ visits (of sick): Of all sick visits you do, what percent are coded either as a 99214 or a 99215? Don’t forget that any non-well visit should be considered a ‘sick visit’ in this paradigm, and any lengthy mental health visits (ADHD, autism, depression) should be represented here.
Average ancillary revenue per sick visit: This is the average additional payment you expect for sick visits in additional to any E&M payment. This would include any revenue from labs, injections, spirometry, screening questionnaires, procedures, or other services provided as part of a sick visit. Some visits have potentially high-paying codes, such as splinting and casting procedures, but the relative frequency of these visits is relatively small.
The calculation in this row, “Average commercial payment per sick visit,” should represent the typical payment you expect from non-well, non-Medicaid visits.
3rd row: Well visit payment
% well visits (of all): Of all patient encounters you perform, what percent are well visits? Well visits are reliably more remunerative than sick visits, for virtually all payers (including Medicaid). Better-run practices with aggressive well visit recall may approach 50%; practices who do not recall patients for well visits may be as low as 20%.
Average well visit revenue (without immunizations): Well visit revenue should include payment for the age-defined well visit E&M code, as well as additional revenue for age-appropriate vision, hearing, lab screening, developmental and behavioral instruments. Omit immunization administration (9046x, 9047x) and immunization products (906xx, 907xx) from this value. Not every well visit will have every type of service performed; use the Bright Futures periodicity schedule to determine the relative frequency of each type of service.
The first calculation in this row, “Average revenue/commercial visit (no imms)” gives the predicted revenue per visit for non-Medicaid visits, exclusive of any immunization revenue.
The second calculation in this row, “Predicted panel size,” takes the number of well visits per year and computes (based on a weighted average of 1.35 well visits/patient/year across the 0-21 age spectrum based on Bright Futures recommended well visit frequencies) a panel size.
4th row: Medicaid adjustment factors
% Medicaid payment: What percent of your commercial fee schedule will Medicaid pay? Medicaid payments in state fee-for-service programs range from 33% to 127% of Medicare for primary care services, with the national average being 66%. Medicaid MCO payments are similar to this range in some regions, and somewhat higher than fee-for-service payments in other regions.
% Medicaid (of encounters): This may not be identical to the percent of Medicaid patients in your practice, since children with Medicaid tend to have more health problems and are thus higher utilizers of health care. However, knowing the percent of children with Medicaid in your community can give a rough estimate.
The first calculation in this row, “Total nonvaccine revenue,” computes the sum of the revenue of your commercial line of business plus the revenue of your Medicaid line of business, using the % Medicaid payment and % Medicaid encounters figures to compute the latter.
The second calculation in this row, “Average revenue per visit (nonvaccine)” is simply the first calculation in the row divided by the number of encounters.
5th row: Immunization revenue
Immunizations per year: How many immunizations (including flu vaccines) will your practice administer per year? Pediatric patients who complete the ACIP-recommended vaccine schedule receive about 2.5 vaccines per year on average between 0 and 21, with all ages receiving at least one vaccine per year (a flu vaccine), and ages 0-1, 5, and 11 receiving more. However, even if your practice requires patients to be vaccinated, some of your patients’ vaccinations will be given outside your office — at the health department, pharmacy, school, etc. You can use the ACIP recommended schedule along with your anticipated panel size to estimate.
Non-Medicaid immunization admin revenue (per immunization): How much administration revenue per non-VFC immunization do you receive? This would be represented by a weighted average of your payments for 90460 + 90461, 90471, 90472, etc.
Average immunization purchase cost per product (non-VFC): Using the CDC’s Private Sector Dose pricing guide as a reference, a practice using non-combination vaccines might give 54 doses of vaccine between ages 0 and 21. The average private sector price (i.e. market price for private practice pediatricians who do not have access to health department pricing) might be around $65** (ranging from a dose of $17** flu vaccine to a $268** Gardasil). A practice using combination products would have a higher average price. A practice with high influenza coverage rates would have a lower average price. **Summer 2023 prices
Average markup revenue per imm dose (non-VFC): The AAP Business Case for Vaccines recommends that payments be at least 125% of the CDC private sector price, i.e. 25% markup revenue for this field.
The calculation in this row, “Total immunization revenue per year,” is the sum of both Medicaid (VFC) and commercial lines of business.
- Medicaid vaccine revenue assumes all Medicaid vaccines given are VFC, and the revenue is the product of the number of vaccines given (row 5, factor 1) times the practice’s Medicaid percentage (row 4, factor 2) times the practice’s non-Medicaid immunization admin revenue per immunization (row 5, factor 2) times the % Medicaid payment adjustment factor (row 4, factor 1).
- Non-Medicaid vaccine revenue includes the product of the number of non-Medicaid vaccines given times the non-Medicaid immunization admin revenue factor. It also includes the number of non-Medicaid vaccines given times the average immunization purchase cost per product (row 5, factor 3) increased by the average markup revenue per imm dose (row 5, factor 4).
6th row: Revenue Summary
The first calculation in this row, “Total revenue per year,” is the sum of “Total nonvaccine revenue” and “Total immunization revenue per year.”
The second calculation in this row, “Average revenue per visit (with vaccines)” is “Total revenue per year” divided by the “Total encounters per year” (row 1, factor 5).
7th row: Salary Summary
Practice overhead: This represents all expenses not ascribed to the physician that are required to run the practice: staff salary and benefits, rent, utilities, vaccines and medical supplies, equipment, furniture, computers, and so on. Pediatric practices usually range between 50-75% overhead. A larger number is not necessarily bad if it means more net revenue is generated.
Collections: Practices rarely collect all revenue that is legitimately due them. This figure, commonly called “net collections,” represents the amount of generated revenue that was allowable and collected. Because the rest of the practice overhead must be paid first, collection discounts are applied to entirely to the physician salary, not overhead. That is, a drop in collections rate of 3% may drop the physician’s salary by 10% or more.
Benefits: This includes all non-salary costs associated with the physician that have not already been accounted in the overhead figure. Typically this includes physician employment taxes, medical malpractice insurance, health insurance, other supplemental insurances (such as dental and vision), an HSA or other spending account, practice contributions to the physician’s retirement fund, a CME allowance, or other personal benefits.
The first calculation in this row, “Available for salary,” represents the amount of revenue generated by a physician that remains after overhead has been paid, collections have been adjusted, and benefits have been paid.
The second calculation in this row, “Salary/hour,” represents the “Available for salary” figure divided by the total number of hours worked. The total number of hours worked assumes 8 hour days times the number of days worked per week (row 1, factor 3) times the number of weeks worked per year (row 1, factor 4).