RVUs 101: How Physicians Can Increase Their Pay with Dr. Glenn Loomis

"Sitting in an office talking to a patient has a different level of expense associated with it than doing heart surgery. RVUs are a way to account for time, and also for the intensity of service."

Dr. Glenn Loomis is a seasoned healthcare leader with decades of experience as a physician, residency director, medical group president, and health system executive. Currently a board member at KVLR Capital Partners and Chief Medical Officer at Dapper Care, he specializes in physician compensation models, practice management, and leveraging technology to improve healthcare delivery.

In this special three-part series of How I Doctor, Glenn speaks with Offcall co-founder Dr. Graham Walker about the ways physicians can maximize their earnings and start getting paid fairly. This first episode examines the Relative Value Unit (RVU) system. The second episode reviews the intricacies of employment contracts. The third episode explores how to prepare for an interview and evaluate a potential new employer.

While not perfect, RVUs have become a crucial tool in determining physician compensation. With his wealth of knowledge in physician compensation and career advancement, Glenn breaks down the origins and purpose of RVUs and explains how they attempt to quantify the value of physicians’ work across different specialties. Here are the four things every physician needs to understand about RVUs in order to maximize your earnings:

1. Why Do RVUs Exist?

“Relative value units are a way for us to assign value to our efforts. We do that because if you look at one physician practice to another or one specialty to another, it really is comparing apples and oranges and grapefruits.”

Glenn explains that RVUs were designed as a standardized framework to measure and assign value to physician efforts across different specialties and practices. This system allows healthcare organizations to quantify a physician’s workload based on both time and intensity. For example, the level of intensity required for heart surgery is vastly different from a primary care consultation. RVUs attempt to account for these differences and try to ensure a fair comparison.

Glenn goes on to say, “What we have to sell is our time. We're no different than plumbers or electricians ... but we also have a level of intensity and a level of resource utilization that goes in.” Even with its flaws, RVUs are an effective way to “put those two things together and give you a way to account for time, but also account for intensity of service.”

2. How RVUs Differ from Other Compensation Models

“RVUs have flaws, but they’re less flawed than other systems. They’re the best tool we have to compare apples, oranges, and grapefruits across specialties.”

Glenn notes that determining an equitable, scalable and standard system for physician pay is complex. According to Glenn, RVUs are “less flawed” because they more closely standardize value across specialties.

For example, if a physician is paid according to their charges, then those with a high chargemaster are advantaged over those with a low chargemaster. “If I charge a hundred dollars for the same thing that somebody else charged 50 for, I'm at an advantage, but there's no real advantage to the system.”

Likewise, as Glenn explains, if physicians are paid based on volume of visits, then surgeons are highly disadvantaged over, say, primary care physicians. “And so there's really no good way to pay everybody fairly until we come up with this RVU system. And that was the closest that we've come. And that's really why it's so highly in vogue. Even though it's quite expensive, it has flaws and there's no doubt about that. It's the best thing that we have in order to compare apples and oranges.”

3. How to Ensure Fair Pay with RVUs

“Sometimes it’s not about seeing one more patient but adjusting your mix of services to achieve better economics.”

Glenn emphasizes the importance of physicians knowing how many RVUs are assigned to each code. Some procedures may yield lower compensation despite requiring significant time, while others may be more lucrative for the time spent.

Glenn agrees with sentiment from Dr. Eric Bricker that maintaining your own spreadsheets are vital for physicians and adds that “building a spreadsheet that takes all your codes and shows you what the RVU is for is crucial to making sure you are being paid fairly.” Additionally, he recommends cross-referencing this data with employer-provided compensation reports to verify accuracy.

Offcall is compiling the largest physician-led compensation transparency database. Be sure to sign up to gain access to salary benchmarking information in your specialty and geography.

Physicians often hear directives to “see one more patient” to improve practice economics, but Glenn suggests a more nuanced approach. By analyzing which procedures yield higher RVUs, physicians can adjust their workload to optimize compensation without overburdening themselves.

4. Understanding Conversion Factors in RVU-Based Pay

“The conversion factor is where a lot of control and negotiation happens. Physicians need to understand how it’s calculated.”

Conversion factors play a crucial role in translating RVUs into actual compensation. Glenn explains that there are two main types of conversions: the Medicare Conversion Factor, which determines reimbursement rates for services based on RVUs assigned by insurers, and the Employer Conversion Factor that is used by healthcare systems to calculate physician pay based on salary surveys, specialty-specific RVUs, or total collections.

Healthcare organizations often negotiate these factors, creating variability in how RVUs translate to pay. For example, some systems offer hybrid models combining base salaries with RVU bonuses, while others use fixed dollar amounts per RVU. Understanding how these conversion factors are calculated allows physicians to better negotiate contracts and advocate for fair compensation structures.

As Glenn says, “If you understand how the system works, you can have much more productive conversations and find solutions that benefit everyone.”

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Transcript

Glenn Loomis:

Me sitting in an office talking to a patient has a different level of expense associated with that and intensity than perhaps if I'm in the middle of doing heart surgery. And so RVUs are a way to try to put those two things together and give you a way to account for time, but also account for intensity of service.

Graham Walker:

Welcome to How I Doctor where we're bringing joy back to medicine. Today I'm sitting down with Dr. Glenn Loomis, currently a board member at KVLR Capital Partners, focusing on acquisitions in the healthcare space as well as Chief Medical Officer of Dapper Care, a startup that combines telehealth and AI to make high quality, affordable healthcare accessible to everybody.

Glenn has counseled hundreds of physicians on advancing their career and bringing a wealth of experience to negotiation tactics. I'm excited to talk with Glenn today and extremely fortunate. He is an expert at areas that I know I am very naive about, and I think a lot of other physicians are too.

We're going to change up the format a little bit of our normal How I Doctor podcast so we can go deep onto three topics. We're going to talk about using RVUs to your advantage, what to look for and what to avoid in employment contracts, and finally we'll touch on how to best interview for a new opportunity and make sure it's a good fit. Welcome to the show, Dr. Glenn Loomis. Thanks for being here.

GL:

I'm really excited to be here.

The Evolution and Implementation of RVUs in Healthcare Compensation

GW:

Glenn, this is fantastic. Thank you. Maybe just to set the stage a little bit, I thought maybe you could just give our listeners a bit of context and background into who you are. I know you previously were practicing at Andrews Air Force Base. My dad used to work at Andrews as well until we moved back to Kansas City. You've worked at health startups and been a thought leader. How did you get into this space of contracts in RVU and the finances behind medicine?

GL:

Yeah, thanks. I have been fortunate to have a really long career and done a lot of fun things. I started off in the Air Force and enjoyed my four years there, and then I was 10 years teaching in family medicine residency, was a residency director, and then about 15 years as a medical director and then the president of a medical group and the CMO of a health system. And then about five years ago, after we went through a merger in the health system I was in, I had enough of health systems for a while and IT has always been my, I call it my side gig. I've done Epic implementation four times and Cerner once. So I went and worked for a startup for a year. I've been doing some stuff with IBM in the AI space, and then went to work for a virtual healthcare company and was running the medical group for them. And been just really fortunate to have done a lot of things in my career, most of which involve working with physicians either as residents or as practicing physicians and negotiating a lot of things with them from one side of the table or the other.

GW:

I don't know that I've met somebody that's practiced and then been a residency director and then medical director and then so on and so on. Where does that come from? What's made you find so many unique opportunities throughout your career?

GL:

Yeah, I think maybe there's a little bit of ADHD in there somewhere, but mostly I really enjoy learning and learning new things and learning new skill sets. And most of all, I think everybody who knows me would say I'm an innovator and I like to be on the forward cusp of medicine. And as I look to where the future of medicine is really going, I think the virtual world is where it's going for everything that's non-procedural, and now AI is going to play a huge part in that as well, and so I like to position myself where the puck is going, not where it's at.

GW:

Yeah, and AI is moving so quickly. It's hard to even know where exactly the puck is going to be, but I think having an interest and an understanding of AI is going to definitely make us all stronger and better too.

Maximizing Compensation: Understanding RVU Values in Medical Practice

Well, Glenn, let's dive right into part one here. We're going to talk about RVUs. We'll start really basically. We're going to talk about Relative Value Units. It's not the sexiest term. Glenn, where do RVUs come from? Do you have ideas about the controversy of questions around them?

GL:

RVUs, as they say, Relative Value Units, are a way for us to assign value to our efforts. And we do that because if you look at one physician practice to another to another, or one specialty to another to another, it really is comparing apples and oranges and grapefruits, right. We are all a species of fruit maybe, but we are very different. And so RVUs tries to take all of that and assign some value to each of our efforts and then be able to compare people across specialties, across practices, et cetera, and so that really is the basis of it. It was first done by the medical groups, actually by partly with the AMA, and then Medicare really got involved and decided that was what they were going to use as the way of assigning value to codes. And here we are 50 years later or 40 years later, still arguing about whether it's a good system or not.

GW:

It was a chance and a trial to standardize and quantify what I think is very challenging to quantify. I think the concept makes sense to everybody that, “Hey, we need to find some way of quantifying what do you do every day?”

GL:

Yeah, absolutely. And also it's a way to mix together two things, which is physicians, what we have to sell is our time. We're no different than plumbers or electricians or anybody else that way, or attorneys, but we also have a level of intensity and a level of resource utilization that goes in. So me sitting in an office talking to a patient has a different level of expense associated with that and intensity than perhaps if I'm in the middle of doing heart surgery. And so RVUs are a way to try, and again, try I emphasize, to put those two things together and give you a way to account for time, but also account for intensity of service.

GW:

It does add some of the nuance of maybe the difference with a plumber or an electrician that there is a level of intensity. You could also imagine an invasive interventional cardiologist, them seeing a patient in the clinic is different than them doing a cath. Or an orthopod replacing a hip or something like that as well.

Glenn, some physicians, their compensation is fully tied to RVUs or at least partially tied to RVUs. Has that always been part of the RVU system or was that a more recent development that your actual take-home pay is tied to your RVUs?

GL:

I think it's really been since we've gone to more corporate medicine, if you will, that that has really come into vogue, and the reason for that is, and I can tell you I've been through all of these systems and all of these changes, so I can tell you why. If you really look at other ways to quantify what you do and pay you for it, they all have flaws and RVUs have flaws too, but less flaws than the others, I think. And the reason is, if I say, "Oh, we're going to pay you based on something related to your charges." Well, if you have a really high charge master, then you're advantaged over somebody who has a low charge master. If I charge a $100 for the same thing that somebody else charges $50 for, then I'm at an advantage, but there's no real advantage to the system.

Likewise, if we use collections, then people who take care of Medicaid patients are highly disadvantaged over people who take care of private insurance patients. And then if we just use visits for example, then surgeons are highly disadvantaged over say, primary care. And so there's really been no good way to pay everybody fairly until we came up with this RVU system and that was the closest that we've come. And that's really why it's so highly invoked, is even though it has flaws and there's no doubt about that, it's the best thing that we have in order to compare those apples and oranges and grapefruits.

GW:

Yeah, it's almost like the least bad or the least messy of all the systems. Glenn, do you have opinions on, are there things that physicians need to understand in order, especially if they're paid by RVU or partially paid by RVU or incentivized by RVU? Are there things that physicians really need to understand about the RVU system so that they're getting their fair share of compensation?

GL:

Absolutely, I think the biggest thing that people need to understand is, what things pay how much. In other words, how many RVUs are assigned to each code because it may well be that you do things that you like to do, or that you're good at, that actually don't pay that well. But other things in your practice that you don't love that much, but they actually pay really well and you ought to make sure that you get your mix correct so that you're getting the highest value that you want.

I'll give you an example. A neurosurgeon that I worked with, he loved to do back surgery, he hated to do injections of any kind. The reality is if you look at pay per time spent, the pay per time spent for injections was much higher than what he was getting for the big surgeries that he was doing. And so as he learned that he changed his practice a little bit to add some of those things that he didn't love as much because they actually helped him from a pay point of view.

Negotiating Conversion Factors and Understanding RVU-Based Compensation

GW:

Glenn, the other thing that I know is that there's a conversion factor, and that is often, especially for people that are paid only on RVUs, it's really that conversion factor that often is something that maybe the physician or the group is negotiating with the hospital, the ASC, whatever it is. How much control do physicians have over negotiating that conversion factor, and are there ways that they can work with their hospital or their group to influence that?

GL:

Yeah, so there are two separate conversion factors that we talk about. One is, there's a conversion factor that we use with RVUs in an insurance contract. And that means how much are you actually collecting for that from that insurance provider? We typically, when we talk about conversion factors for pay, those are usually done by whatever the entity is that's paying you, and they're typically done either based on the total collections that you're bringing in, and then we come up with a conversion factor, or in a lot of cases because of compliance reasons, if you're dealing with health systems, we do it instead based on salary surveys. In other words, we say, "Okay, well the average for RVU..."

If we take all the RVUs that are done by physicians and we divide it by all the pay that's given to physicians, we come out with some conversion factor. And that's where there's a lot of control that can be exercised because you can use different years to base it on, different years. There was a change to the whole RVU system about five years ago, and that really upended a whole lot of things, so you can use different years, you can base it on the specialty and how different rates per specialty. There's a lot of different ways to skin that cat, and that's usually where the arguments come in within the medical group board or the physician compensation committee or however you run it in your organization.

The Importance of Financial Literacy for Physicians in Practice Management

GW:

Glenn, we talked with Eric Bricker recently. He really feels the way that physicians can gain more leverage is by really understanding stuff at a fundamental level. He even recommended making your own spreadsheet to even see what procedures, what are the codes typically in billing and maybe how often I'm billing them, and what are the RVUs associated? Do you recommend that level of detail for your clients that you consult with?

GL:

Yeah. Well, first of all, I'd just like to say I love Dr. Bricker and-

GW:

He's incredible. Yeah.

GL:

... I follow his videos religiously. And I agree with him that it is really important that doctors understand things at a fundamental level. This is part of our problem, I think, is as we've gone to corporate medicine, most physicians really don't understand how a practice works. They leave it to the medical director or to their directors or managers or office managers, and they really should have some idea of how things work, and so building a spreadsheet that takes all your codes and shows you what the RVUs for, it gets back to what I was saying about knowing what pays and what doesn't in your practice, I think it's important that you actually take the data that you're being given from your employer and use that as a place to start, because the first thing is, check and make sure that all of the things you're doing are actually being accounted for.

I've been in places where we weren't very good at that at first until I got us good at it, and so having doctors check our work was important. The second thing is, if you take that and you know that everything's being accounted for, then you get a really good idea of, I can trust the data that I'm being given, or I can't trust the data that I'm being given. If you can't trust the data, then you should keep your own spreadsheet. If you can trust the data, then you should look at what you're being given and follow through on that.

GW:

I'm hearing a couple of things. One, trust but verify. I like to always tie it back to medical concepts. You or I probably would not be satisfied with somebody just saying, "Oh, give Lasix." Physicians typically want to know the reason why we are doing a thing. We're giving a medicine, we're ordering a test. We are trained in the anatomy and the physiology and the pathology of everything. So similarly, you want to know why you're being paid what you're paid, and how the actual spreadsheet works, how the sausage is made. And only then are you really going to be able to understand the output, the compensation at the end of the day. Is that right?

GL:

Yeah, absolutely. I think it gets to an even more fundamental level, which is, one of the things that I see with people that I've employed and other people who come to me for advice on these things is they're saying, "They're trying to make me see more patients” or “It's all about the RVs,” and you have to understand on the other side of that equation, somebody is trying to make the economics of the practice work. And having run practice for a long time, the answer to almost every problem in every practice is see one more patient. That is pretty much the answer to the problems, and so you have to understand, well, maybe it isn't see one more patient, maybe it's due two more of those injections and one less surgery, and we can fix the economics. And so if you understand how it works, you can have a much more productive conversation.

GW:

It's like the informatics joke is that everybody just wants a hard stop for their thing, but often the hard stop is not the right answer, so it's a great point. The easy answer is always just see one more patient, but there are probably other ways to achieve the same result.

GL:

Yeah, exactly. Sometimes you can just change the mix and that will do the trick.

GW:

A big thanks to Dr. Glenn Loomis for joining me today to kick off this three part series.

In our next episode, Glenn will dive deeper into the intricacies of employment contracts covering key red flags to watch out for, and strategies for stronger negotiations. Stay tuned.

If you want to learn more about the ways doctors should rethink their finances, visit offcall.com/podcast. Make an account on Offcall to confidentially share your details about your work. And sign up for our newsletter where you can hear more about the latest trends we're seeing in physician pay. You can find How I Doctor on Apple, Spotify, or wherever you listen to podcasts. We'll have new episodes weekly. This has been and continues to be Dr. Graham Walker. Stay well, stay inspired, and practice with purpose.