University of Virginia Library

UNIVERSITY OF VIRGINIA
DEPARTMENT OF MEDICINE

REPORT OF COMMITTEE ON PRIVATE PRACTICE

I. BASIC CONSIDERATIONS

Certain basic considerations must be kept in mind in determining the best policy for organization
of private practice in the University Hospital and for remuneration of the Clinical Staff
Among these considerations are the following

1. The reasons for existence of the University Hospital are production of well-trained physicians,
research and medical service.

2. In order to provide proper instruction, there must be an adequate supply of patients and,
to set a good example for the students, they must be given the best possible type of medical
care.

3. The institution is recognized by the people of the State as a center at which superior
medical service can be obtained and it would not be in the best interest of the institution
or the public to deny such service to those who can afford to pay for it. Therefore,
provision for the care of private, as well as ward, patients is necessary.

4. Clinicians, like other members of the faculty, should be compensated for time and effort
devoted to teaching and research and on approximately the same basis as preclinical faculty
members. The source of additional income must be private practice because, viewing
the problem realistically, there is no hope of establishing a salary scale on State funds
comparable to the income which may be available from private practice or at other medical
schools.

5. Income from private practice should not be used as it has been to maintain hospital equipment
or services essential for the care of the hospitalized patients. The 20 per cent deduction
now in force is a reasonable charge for employment of extra secretaries and office
nurses and purchase of supplies and equipment for care of private ambulatory patients.

6. The demand for and interest in teaching and research will never be the same for all members
of the clinical staff. Some will devote the major share of their time and interest to
teaching and research and others to private practice. It does not seem reasonable that
those who are members of this group and spend a greater portion of their time and efforts
in private practice should be compensated out of all proportion to those who devote more
of their time to teaching, research and administrative activities which are of equal importance
to the School. It should be recognized, however, that stresses incident to assumption
of responsibility for life and death, day and night, regardless of academic sessions,
constitutes a hazard to life and longevity to which only the clinician is subjected

7. There are recognized advantages and disadvantages in the association with a medical school
and teaching hospital. The advantages are more apparent to some than to others and only
those who choose this type of life, realizing its restrictions and limitations in terms of
financial return, can remain happy in it. Those who feel that a larger income and greater
amount of freedom are more important considerations should not confine themselves to such
an environment but should take advantage of the opportunity to practice independently and
earn larger amounts without the restrictions which are inherent in institutional practice.
As a corollary, however, it should be recognized that medical schools and teaching hospitals
are of necessity in competition with each other and clinicians of high attainment cannot be
attracted or retained on incomes out of all proportion to those available at similar institutions.

8. The administration of the University should make a vigorous effort to increase and staff
and to overcome inadequacies in facilities so that the burdens may be properly distributed
and a pleasant working environment provided.

9. The question of salaries cannot be divorced entirely from the whole problem of the organization
of private practice in the Hospital. Further attention should be given to the development
of methods of practice which will give the best service to patients yet conserve the
time and energy of the staff. The fact that steps in this direction may require more cooperation
between individual physicians and departments in the conduct of practice must be recognized

10. Promotion in academic rank should be based on academic achievement rather than capacity to
earn in private practice and earning allowance from practice should not be related directly
to rank.

II. TYPES OF ORGANIZATION OF CLINICAL STAFFS IN TEACHING HOSPITALS

1. Part-time, in which members of the faculty carry on their private practices outside of and
entirely independent of the medical school and teaching hospital. They come to the hospital
when they have teaching assignments, have the privilege of admitting private patients, usually
are not engaged in research and receive little or no compensation from the medical school.
This plan has not proven most suitable for development of strong schools and is gradually
being discontinued.

2. Straight full-time, in which all income from private practice is turned in to the institution
and the staff is compensated on a straight salary basis. This plan is in operation completely
only at the University of Chicago and partially at several other schools. It is probably not
practical for a state institution where large salaries, regardless of the source of funds,
cannot appear on state budgets.

3. Geographical full-time, in which members of the clinical staff have offices within the
teaching hospital, engage in various amounts of instruction, research and private practice.
The school pays a basic salary and provides office space. The clinician reimburses
the institution from private practice income for approximately the cost of rent, equipment
and personnel, such a secretaries and office nurses, necessary for conducting practice efficiently.
This plan usually entails some restriction in the amount of income from private
practice.

This plan is considered the most desirable by medical schools throughout the United
States, all new schools are adopting it and many older schools are working toward it. It
provides a good balance between teaching and practice, good medical care for the patients
and adequate attention to the medical students. Although we recognize certain deficiencies
in our organization which interfere with its most efficient operation, the geographical
full-time plan at the University of Virginia should be preserved.

III. PROPOSED REORGANIZATION OF PRIVATE PRACTICE

In order to provide better service, to conserve the time and energy of the staff in care of
private patients and to derive a larger income for development of the Medical School and Hospital,
it is recommended that physicians services to private patients be organized on a cooperative
basis.

To implement this recommendation, it is proposed (at such time as proper physical facilities
can be provided and the details can be worked out):

1. That a group clinic be established, to include all members of the clinical staff of the
University Hospital who are appointed on a geographical full-time basis.

2. That a clinic manager and secretarial and accounting staffs be employed by the clinical
staff to handle the business affairs of the clinic.

3. That a Private Clinic Committee be elected by the clinical staff annually and be delegated
responsibility for determining the administrative policies of the Clinic including the
Central Billing Office. The Dean of the Medical School shall be a member of this committee
ex-officio

IV. INTERIM PROGRAM

Pending further study and development of the program outlined in Section III, it is recommended
that the following revision of the existing plan for conduct of private practice and
compensation of the clinical staff be put into effect:

1. A central office for distribution of bills for private services and collection of fees
will be established.

• (a) The cost of operating this service will be prorated on the basis of a formula which
  takes into consideration the amount collected and the number of bills distributed
  Charges will be made to the departments at the end of the fiscal year. The Fluid
  Research and Development Fund will be used as a source of capital during the year
  and reimbursed.

2. Total income to the clinician shall consist of the basic salary paid by the University
plus income from private practice within established limits.

3. The basic salaries shall be flexible and adjusted to the teaching load and academic contribution
of the individual.

4. The regular net income allowance from private practice, as determined for each member of
staff, shall be calculated by deducting 20 per cent of the gross income for departmental
expenses.

5. The net income allowance from private practice shall increase at the rate of $750.00 per
year up to a maximum total income (basic salary plus practice earnings) of $20,000.00
without consideration of academic rank. Furthermore, in exceptional circumstances, the
usual annual increment in practice earnings may be denied or doubled on agreement of the
Departmental Chairman and the Dean. (All changes will be effective on July 1st. Members
of the staff appointed between July and January should receive the first increase on the
next July 1st, others, the following year.)

6.

• (a) Practice earnings, up to prescribed limits, after the standard 20 per cent deduction
  has been made, may be withdrawn as accrued during the year.

• (b) At the end of the year after all departmental expenses, as agreed upon by the Departmental
  Chairman, the Dean and the Bursar, have been met, the departmental surplus
  shall be divided as follows:

       

  Fluid Research & Development Fund	40 per cent
  Clinicians	40 per cent
  Departmental Reserve	20 per cent

  (The amount of the above allotted to each clinician shall be decided by mutual agreement
  of members of the department and with approval of the Dean.)

• (c) New members of the staff, except full professors, will be appointed on a basis which
  excludes the privilege of participating in surplus earnings and these provisions may
  apply only after a period of trial of at least two years and on agreement of the Departmental
  Chairman and the Dean.

7. The Departmental Reserve Funds shall be used to purchase equipment and for other necessary
expenses which cannot be covered by current operating funds.

8. The title to all equipment purchased with funds derived from current income, Departmental
Reserve Funds or the Fluid Research and Development Fund shall rest in the University.

9. The title to all money deposited in Departmental Reserve Funds and the Fluid Research and
Development Fund shall rest in the University but shall be designated for these specific
funds. In the event of the dissolution of a department, its Departmental Reserve Fund
shall revert to the Fluid Research & Development Fund.

10. If, because of death, resignation, retirement or incapacity due to illness, the clinician
severs his connection with the University, income accrued, including accounts receivable,
within his established limit and after deduction of the usual 20 per cent for overhead,
shall be paid to him or his beneficiaries, within the limits of the plan as stated above.

11. The budgets of all departments must be approved by the Dean and the President and all
financial transactions must clear through the Bursar's Office and be subject to pre-audit.

12. Each member of the staff will be expected to maintain a reasonable balance between academic
responsibilities and private practice. The emphasis on each activity must at all
times remain satisfactory to the Departmental Chairman and the administration.

13. The plan of compensation shall be subject to review and individual compensation may be
revised upward or downward, in keeping with economic trends, one year after the group
practice plan is put into effect and/or at intervals of four years.

14. The plan shall be retroactive to July 1, 1951.