Physician Overhead

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Policy: Physician Overhead
Policy Nr: Sec 08 - 05
Target Review Date: 2019-08-29
Main Stakeholder: Executive Committee


The Department of Internal Medicine (DOM) established an overhead charge in 1999 for all of its full-time academic physicians at a fixed rate of 14% on income generated from all clinical activities. In 2002 the rate was reduced to 12.5%. Between 2001 and 2004 the WRHA Medicine Program progressively expanded clinical activities in General Medicine into three of the community hospitals.

During this expansion, a number of non-GFT family physicians, general internists and an increasing number of specialists were recruited to fulfill specifically described roles as hospitalist attending physicians on non-teaching and Clinical Teaching Units at an increased number of Winnipeg hospitals. The majority of general internists recruited during this expansion were hired under non-GFT contracts which combined both teaching and non-teaching hospitalist activities together with General Internal Medicine in-hospital consultant duties and undergraduate medical student clinical teaching. These individuals were also guaranteed a minimum of one half-day per week of Ambulatory Care Clinic access at their request. Although the majority of these physicians were recruited upon graduation, several withdrew from private clinic practice to assume essentially full-time practice as independent contractors within the WRHA Internal Medicine program.

In order to support these physicians’ clinical activities and create appropriate ambulatory care environments in the community hospitals to which they are attached, a 10% overhead charge was instituted by the WRHA Medicine Program from all clinical incomes generated from their contracted activities. Their overhead charge covers Physician Billing Services, Transcription Services, ambulatory care operating expenses attached to the community hospitals and the expansion of the regional Medicine Database to the community sites.

Since 2004 a number of specialists have contracted to provide ambulatory care services and in-hospital consultation at the community sites. Involvement varies from 0.1 to 1.0 EFT activity. Since clinical activities generated by these individuals generate costs to both the DOM and the WRHA Medicine Program as previously described, overhead charges have been applied in a manner consistent with the above precedents. Specialists working less than the equivalent of 0.5 EFT in core services administered by the WRHA Medicine Program as assessed by the DOM Relative Workload Evaluation Scale are charged 20% on all related clinical earnings and those generating a 0.5 EFT or greater are charged a 10% overhead.

Overall Objective

The following policy provides a further clarification of the current state in order to guide future discussions and negotiations with potential physician recruits to GFT or non-GFT clinical and teaching roles. The policy also describes two distinct physician overhead funds: the DOM GFT overhead fund (DOM fund) and the Shared Health Internal Medicine program physician overhead fund (Shared Health fund) and how they are to be managed.


Geographic Full-Time Physicians (GFTs)

As has been the case since 2002, full-time faculty members recruited to the DOM will have all clinical earnings deposited with UMG. The DOM will extract 12.5% to cover overhead expenses. The accumulated DOM fund is to be used to provide practice support. In addition, this fund will be used to advance the academic mission of the department in the form of faculty development activities and supports recruitment and subsidies for moving expenses, and the funding of research start-up costs. Accumulated surpluses over time may be used to strategically invest in the academic advancement of the department as deemed appropriate by the head and agreed to by the Executive Committee including the majority of the Section Heads.

Practice Supports

The DOM fund will be used to provide the following for each GFT physician:

  1. Suitable office furniture Recruitment Office Expenses
  2. Comprehensive Physician Billing Services as contracted by the department
  3. transcription services dictated via telephone and access to certain Shared Health systems remotely via a personal laptop/desktop. This is done via Remote Access to Shared Health Network - Unmanaged (Home PC) computer experience.
  4. Annual subsidies for academic travel
  5. Accounting services charged by UMG
  6. Appropriate secretarial support (see Support Staff Allocation)
Department of Internal Medicine Administrative Function

Administrative staff and support as deemed appropriate by the Department Head. This will include:

  1. A full-time Managing Director
  2. Appropriate support staff to provide administrative assistance to academic sections
  3. Public relations including special events planning and fundraising
  4. Information technology support (Computer Hardware and Software, Portable Electronic Device Policy)
  5. Quality improvement support:
  6. Recruitment support (eg. Recruitment Interviewing Expenses, Recruitment Relocation Expenses, Recruitment Office Expenses)
  7. Performance evaluation support (Performance Review and Research Performance Review)
  8. The fund is intended to cover other administrative activities such as: legal opinions; external reviews; financial auditing and strategic planning exercises; and PGME activities including CaRMS Match, Royal College accreditation.
Research and Faculty Development Support

The DOM has, over the last decade, expanded its role in investing in its own academic development. Examples include:

  1. Providing more research startup funds for newly recruited clinician scientists.
  2. Resident Research Day
  3. Resident travel
  4. Offering salary support for recruitable postgraduate trainees who undergo extensive additional training upon condition of full-time recruitment and a return-of-service agreement.
  5. Seeding of Endowed Research chairs. Endowments can only be initiated with residual surplus exceeding a positive balance of one million dollars for the preceding Fiscal year end.

While the department has recently expanded investment in its academic development, it must be clear that its capacity to do so is entirely dependent on its ability to manage practice support expenses efficiently and generate substantial annual surpluses without increasing overhead charges to its members. It should also be stated that the primary function of the overhead fund is to cover members’ practice support costs. It is also important to state, however, that the ability of the department to access the overhead fund in order to direct its own academic evolution has been transformative.

Prohibited Expense Categories

The way in which the DOM fund is directed ultimately reflects the values of the academic department. While retaining and even expanding its practice support obligations over the last decade, the department has strived to minimize these through efficiency, reorganization and investment in new technology. It has decided to direct its surpluses in a strategic fashion to enhance its academic stature both nationally and internationally.

This is an important decision. Other departments have chosen to preferentially invest substantial amounts from their overhead fund in support of expansion of their clinical activities. The DOM has resisted the temptation but has not ignored its role or failed to recognize the importance of expanding and modernizing clinical services. We have instead chosen to invest in and develop our ability to redesign, plan and improve service quality and efficiency and thereby generate academic value from that investment.

The department has supported database development, training in quality improvement and the hiring of industrial engineers to improve service quality and efficiency. In doing so, the department has quickly developed a solid reputation with both the Max Rady College of Medicine and Shared Health in its ability to analyze and restructure clinical services. Through this strategy we have been able to successfully negotiate public funding for expanded services without investing member dollars in supporting salaries of nurses, clerks and allied health workers. It is imperative that an academic department resist the temptation to permanently commit surplus to the funding of expanded clinical programs. This is the responsibility of the Shared Health and government and not the members of the DOM.

The DOM fund cannot be used to:

  • Salary and benefit costs of members.
  • Expand or create new academic salaries for clinical and basic science faculty.
  • Provide operating funds for clinical services.
  • Provide operating funds in support of industry-sponsored research.

Non-Geographical Full-time and Part-time Physicians (Full-time Non-Group / Part-time Non-Group)

The WRHA Medicine program will continue to extract a comprehensive overhead charge on all non-GFT full-time and part-time physicians who are providing clinical service in WRHA facilities under the Internal Medicine program.

The overhead charge will be 10% for physicians generating 0.5 EFT or greater as assessed by the Relative Workload Evaluation Scale.

Physicians generating less than 0.5 EFT equivalent according to the same scale, will be charged a 20% overhead charge on all income generated by these clinical activities. The accumulated non-GFT overhead fund will be administered by the DOM in collaboration with the WRHA Internal Medicine program in order to provide practice support for these physicians including expanded community hospital-based clinical services in which they are employed.

It is understood that the DOM will also benefit from the application of this fund since many geographic full-time physicians will be able to generate income through participation in these services. It is vital that the non-GFT part-time and full-time or WRHA fund be maintained separately from the DOM GFT overhead fund.

Practice Supports

The WRHA Internal Medicine program physician overhead fund will be used to provide the following for each non-GFT physician.

  1. Comprehensive Physician Billing Services as contracted by the department for WRHA program clinical activities.
  2. transcription services via dictation by telephone and access to certain WRHA systems remotely via the individuals laptop/desktop. This is done via Remote Access to Shared Health Network - Unmanaged (Home PC) computer experience.
  3. Accounting services charged by UMG.
  4. Operating budgets for WRHA Internal Medicine Program community-based ambulatory care services.
  5. Appropriate information technology support (Computer Hardware and Software, Portable Electronic Device Policy)
  6. Cost related to service quality improvement and standards functions.
  • Note: These services are provided only to all non-GFT full-time and part-time physicians who are providing clinical service in WRHA facilities under the Internal Medicine program. Physician's with nil-salary appointments to the University of Manitoba via the Department of Internal Medicine, practising exclusively in other WRHA clinical programs do not receive any of the above.
Department of Internal Medicine Administrative Function

While the WRHA Internal Medicine Program physician overhead fund will be maintained separately from the DOM GFT overhead fund; both are administered through the DOM business office. The DOM GFT fund also provides support for regional quality improvement and standards support in the form of industrial engineers, and databases at the two teaching hospitals. As a trade-off however, the WRHA fund resources the community hospital databases as well as Ambulatory Care Unit operating costs, which are made available to GFT physicians. In view of these trade-offs, expenses incurred by the DOM through the administration of the WRHA fund which are currently moderate, will continue to be absorbed by the DOM.

Prohibited Expense Categories

The WRHA fund will not be used to support the following:

  1. Subsidization of academic activities in the DOM including academic salaries, research start-up costs, faculty recruitment or development or the seeding of endowments.

Administration and Accountability

Both the DOM GFT overhead fund and the WRHA fund will be administered and managed by the head of the DOM with the understanding that the incumbent is also the medical director of the WRHA Internal Medicine program. Accurate, clear and up-to-date financial records will be maintained by the Managing Director of the DOM who is accountable to the head. Full disclosure of these financial records, including details of all receipts and expenditures will be made available to the section heads of the DOM upon request including an annual mandatory reporting to the DOM Executive Committee. The head of the department will provide the same information for the WRHA fund to senior WRHA executive upon request.

Administrative Expenses

See page Sectional Discretionary Fund.

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