From Renters to Owners: The Long-Term Impact of RVU-Driven Pediatric Care

In my previous article, “The Pediatric Mindset: From Renters to Owners ,” I explored how the current RVU (relative value unit) system fosters a “renter” mentality in pediatric care, where short-term, transactional encounters dominate. This model encourages reactive care, responding to health crises after they occur, rather than investing in preventative measures that improve outcomes over time.

But what happens if we continue down this path? What are the implications for pediatric care if we persist with a system driven by short-term metrics? And more importantly, how do we shift from "renting" patient interactions to "owning" the health and outcomes of our patients?

The Problem with the RVU Model

The RVU system incentivizes volume over value. Physicians are compensated based on the number of patients seen and procedures completed, with little regard for long-term patient outcomes. While this model might work in high-volume specialties, it falls short in pediatric primary care, where relationships and continuity of care are critical.

In this "renter" mindset, pediatricians address symptoms as they arise, focusing on immediate, episodic care. However, managing chronic conditions such as asthma or mental health issues requires long-term strategies that prioritize proactive care over reactive treatment.

By contrast, an "owner" mindset means building sustained relationships with patients, focusing on prevention, continuity, and long-term outcomes. This requires a model of care where pediatricians are rewarded not for patient volume but for improving overall patient health.

Value-Based Care: A Path Forward

To move away from the RVU model, we must shift toward value-based care and risk-sharing models, where pediatricians are compensated based on the quality of care they provide and the outcomes they achieve. These models prioritize long-term patient health rather than short-term transactions.

Key Strategies for Change:

1. Leveraging Data: Data helps predict future health risks and allows pediatricians to intervene early, before problems escalate into crises.
2. Risk-Sharing Agreements: In a risk-sharing model, pediatricians take on some financial responsibility for patient outcomes. Success is measured by long-term improvements in health, such as fewer ER visits or better chronic condition management.
3. Continuity of Care: Building lasting relationships with patients is essential. Continuity leads to fewer gaps in care and better long-term outcomes.

Renting vs. Owning: A 2x2 Table

To help illustrate the difference between the current RVU-driven "renter" model and the value-based "owner" model in pediatric care, here’s a simple matrix:

This matrix simplifies the contrast between the two models, helping to emphasize how pediatric care can shift from a reactive, volume-driven system to one that prioritizes proactive, long-term management.

The Role of Hospitals, Private Equity, and Large Physician-Owned Practices

The shift toward value-based care is complicated by the growing number of pediatricians employed by hospitals, private equity (PE) firms, or even large physician-owned practices. These entities often adopt RVU-driven models and prioritize financial performance over long-term patient care, putting pediatricians in a difficult position.

Hospitals: Undercompensation Despite Referrals

Hospitals frequently employ pediatricians as part of a referral network for specialists and inpatient services. Though pediatricians generate significant downstream revenue, they are often undercompensated compared to specialists. Hospitals push for higher RVU productivity, encouraging pediatricians to see more patients in shorter visits. This emphasis on volume makes it difficult to focus on the long-term, proactive care needed to manage chronic conditions.

Even when hospitals implement value-based initiatives, pediatricians may not see the rewards of improved outcomes. The system still relies heavily on RVUs, meaning pediatricians take on more risk without corresponding compensation or time to invest in proactive care.

Private Equity: Pushing Productivity and Gaming Value-Based Care

Private equity firms, focused on maximizing EBITDA (earnings before interest, taxes, depreciation, and amortization), often push physicians to meet aggressive RVU productivity targets. PE-owned practices may "game" value-based care by implementing superficial programs that check the boxes for risk-sharing agreements without genuinely improving outcomes.

In these cases, pediatricians take on greater responsibility for managing complex patient needs, but the financial rewards typically flow back to the practice owners rather than the physicians delivering the care. This creates a system where pediatricians are asked to do more with less, limiting the potential for meaningful value-based care.

Large Physician-Owned Practices: Following the Same Model

Even large physician-owned groups can fall into the same RVU-driven patterns. While these practices are theoretically more independent, financial pressures can lead them to adopt productivity-based compensation structures similar to those seen in hospitals and PE-backed practices. In these models, physicians are still pushed to maximize patient volume at the expense of long-term care management.

Ensuring Pediatricians Share in the Rewards of Risk

If pediatricians are going to take on more risk through value-based care models, it is essential that they also share in the rewards. Here are a few strategies to ensure pediatricians benefit from the shift to risk-based care:

1. Aligning Compensation with Outcomes: Pediatricians should be compensated for improving long-term health outcomes, not just productivity. This requires compensation models that reward better chronic disease management and population health improvements.
2. Equitable Risk-Reward Models: Risk-sharing agreements must include fair distribution of financial rewards to the pediatricians directly responsible for managing patient outcomes. Pediatricians who take on more risk should see corresponding increases in compensation.
3. Balancing Productivity and Care Quality: Pediatricians need time to provide meaningful, patient-centered care. If productivity targets are too high, quality will suffer. Employers must balance the need for productivity with the need for proactive, outcome-focused care.

Conclusion: Shifting Toward Ownership

To improve pediatric care, we must reject the RVU-driven, volume-based mindset that dominates many hospital, private equity, and physician-owned practice models. True ownership in pediatric care requires a shift toward value-based care, where pediatricians are empowered to manage patient outcomes over the long term and are compensated accordingly.

By adopting risk-sharing models, ensuring continuity of care, and resisting the "gaming" of value-based metrics, we can create a system where pediatricians are rewarded for better care and better outcomes for all children. The future of pediatric care must be one where ownership, not renting, becomes the standard.