Frequency of Call Coverage Holiday Rates

Happy holidays from MD Ranger! This holiday season MD Ranger wanted to see if the market supports different call coverage rates for holiday shifts. We sometimes see differential payment rates for weekend and weekday coverage shifts. Are holidays any different? We found a measurable difference in payment rates when differential rates are paid for weekends and holidays with an important caveat: if the weekend or holiday rates are higher, then the weekday rates are lower than rates paid by hospitals that only have one per diem payment for all days of the year.

It turns out that very few hospitals pay differential rates.

Holidaygraph1

MD Ranger’s comprehensive survey of physician contract rates shows that higher weekend and holidays rates are generally accompanied by decreased weekday rates.

Holidaygraph3

What are the Rate Differentials?

When contracts have a weekend or holiday rate as part of the agreement, the weekday rate drops a different amount based on how the contract is set up.

On average, we found the following rate relationships:

  • Weekday and Weekend
    • Original rate drops 20% to create the new weekday rate.
    • Weekend rates pay 41% more for the weekend shift compared to weekday rates
  • Weekday and Holiday
    • Original rate drops 12% to create the new weekday rate
    • Holiday rates pay 52% more for the holiday shift compared to weekday rates
  • Weekday, Weekend, and Holiday
    • Original rate drops 17.5% to create the new weekday rate
    • The weekend rate is 24% higher than the weekday rate
    • The holiday rate is 57% higher than the weekday rate and 26% higher than the weekend rate

On a weighted basis, the average rate paid is approximately the same as rates paid for a single rate for all days. In other words, be careful to consider the appropriate payment rates for each type of day when negotiating a differential payment structure for call coverage.

The MD Ranger benchmark blends the reported rates to show the average per diem paid by a hospital over 365 days. The median across all specialties for the different payment types results in the following comparison:

Holidaygraph2

How To Calculate Differential Rates

One example may be a general surgery contract which currently pays $500 per day every day of the year. In negotiations the physicians ask for higher compensation on weekends or holidays. The new rates can be calculated by lowering the old rate by 20% to find the new weekday rate. In this case, the new weekday rate is $400. There are three ways to add a weekend and or holiday rate: just a weekend rate, just a holiday rate, or both a weekend and a holiday rate.

There are two steps to calculating the new rates and it depends what type of contract has been negotiated.

  • Weekday and Weekend Rate
    • To find the weekday rate, take the original rate, and take off 20%. The new weekday rate would be $400.
    • The weekend rate will be about 41% above the weekday rate of $400, or $564.
  • Weekday and Holiday Rate
    • The new weekday rate will be 12% lower than the original rate, or $440
    • If only a holiday rate is negotiated, the holiday rate will be about 52% above the weekday rate, or $669.
  • Weekday, Weekend, and Holiday Rates
    • The new weekday rate will be 17.5% lower than the original rate, or in this case $412
    • If both a weekend and holiday rate are needed, the weekend rate should be 24% above the weekday rate, and the holiday rate 26% above the weekend rate. In this case, the weekend rate would be $512 and the holiday rate would be $644.

The total annual expenditure by the hospital for each option would be:

$500 every day $182,500 annually
$400 weekdays and $564 weekends $163,104 annually
$440 weekdays and $669 holidays $163,119 annually
$412 weekdays, $512 weekends, $644 holidays $163,046 annually

Over the course of a year, the least expensive option would be to pay the holiday premium rate only - saving your hospital 11%, assuming you can get your physicians to agree to the reduction in payment for the other days of the year. If that’s not possible, then use the MD Ranger benchmarks to compare the average per diem payment over the course of the year to ensure your differential rates don’t result in payments in excess of market ranges.

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