The Fee for Service Solution involves guaranteed payment per unit of physician service called a Relative Value Unit or RVU.

Advantages

• All participating physicians providing services receive the same value for these services. Therefore, the Fee for Service Solution is inherently fair to all ED backup physicians.
• As patient volume and acuity fluctuates, the cost of the program also fluctuates proportionately.
• The value paid to physicians per RVU can be compared to Medicare to determine how reasonable physician compensation is.
• Extensive data about the collective multispecialty ED backup physician practice is obtained to assist in making sound business and clinical decisions.
• Through the governing committee structure, physicians feel empowered to manage the process.
• Physicians are motivated to see patients since there is no payment unless services are provided.
• Over five years of experience with the Fee for Service Solution shows that it is well received by physicians and solves the problem of availability of ED backup physicians.
• The fee for service solution is discussed in great detail in Issue #4 of the ED Watch Newsletter published by The Advisory Board Company. (Read the entire issue)

Disadvantages

• There is an administrative overhead which is not present in the other two solutions.
• The program is clearly more expensive than the Draft Solution and probably more expensive than the Stipend Solution.
• The hospital has the risk for patient volume, acuity, and payor mix. In the Draft Solution the physicians carry all of these risks, and in the Stipend Solution some of the physicians carry all of the risk and some of the physicians share the risk with the hospital.
• There is a risk of overutilization of physician services which requires management.
• Once initiated, the program becomes extremely popular and would be difficult to dismantle.