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March 19, 2020
Written by: Ben Ulrich, CVA, James Tekippe, CFA, Mallorie Holguin, and Thomas Birdsong
The outbreak of the novel coronavirus and the disease it causes, coronavirus disease 2019 (“COVID-19”), has gripped the world in a pandemic. As of March 19th, over 205,000 cases and more than 8,500 deaths have been reported worldwide due to COVID-19 [1]. Healthcare systems across the world have been overloaded and crippled with the mounting strain of combating the disease. Here in the United States, cases are increasing daily at an exponential rate with no expectation of these numbers leveling off anytime soon. As the nation braces for a potentially long battle, health systems and hospitals are preparing for an influx of cases requiring intensive care. In these dire situations, healthcare physicians and providers become the first line of defense in curtailing the disease.
To combat COVID-19, healthcare providers are being placed in situations of heightened risk and danger of infection. Not unlike employees/contractors in other industries, being asked to take on these risks often necessitates premium compensation. Whether that premium is warranted and to what degree heavily depends on the potential health and financial risks incurred by the provider.
For a provider employed by a healthcare organization, the financial risks may be minimal based on the proposed Emergency Family and Medical Leave Expansion Act, which would provide up to 10 weeks of protected paid leave to eligible employees for a COVID-19 related reason. [2] However, the potential risk of exposure and resulting self-quarantine period will likely lead to physicians, advanced practice providers and hospital staff inquiring about premium hazard pay when treating COVID-19 patients. Referencing the traditional resources like physician compensation surveys will not capture the full degree of risk, burden and potential practice disruption presented by treating COVID-19 patients.
While certain premium compensation rates may be sufficient to engage an employed provider to assist with the COVID-19 specific care plan at your organization, contracting independent providers to staff a clinic or unit may be more challenging. Due to the self-quarantine requirements post-infection, independent or self-employed providers may incur additional financial risk due to limited benefits and the risk of practice operational loss.
When assessing what type of hazard pay premium is reasonable in this type of situation, VMG Health would identify comparable pay premiums to people facing significant risks when conducting their job functions both within the healthcare industry and beyond. For instance, according to the U.S. Office of Personnel Management (“OPM”), federal employees may receive additional pay for the performance of hazardous duty or duty involving physical hardship. Specifically, a 25 percent hazard pay differential is authorized for employees working with… “[materials] of micro-organic nature which when introduced into the body are likely to cause serious disease or fatality and for which protective devices do not afford complete protection.” [3]
VMG Health has observed pay premiums in a variety of industries where individuals are needed in hazardous conditions from oil spills or hazardous material cleanups to serving in dangerous or active combat posts. Even within the healthcare industry, hazard pay premiums have been observed. COVID-19 is not the first disease and outbreak to put providers in danger. For instance, to address the Ebola Outbreaks in West Africa both in 2014 and 2018 [4], doctors and nurses caring for Ebola patients were provided hazard premiums of almost double on top of regular base pay [5]. Though this was an international example, VMG Health observed that hazard pay premiums of varying degrees were needed in the United States to combat Ebola as well. Although observed premiums can vary, it’s clear that hazardous and dangerous working conditions result in more premium compensation rates across various industries. Given the variability in potential premiums and the various risk related factors to consider, its vital to engage qualified valuation experts in assessing any potential premium.
The uncertainty our healthcare system faces in the wake of COVID-19 is clear. New cases are increasing at a rapid pace in the United States and health systems and hospitals will soon face the brunt of this disease if not already. Empowering and supporting healthcare providers to face this threat head on can add a level of security and flexibility that ensures adequate care will be ready when needed.
[1] Novel Coronavirus (COVID-19) Situation Dashboard – WHO
[2] https://www.natlawreview.com/article/covid-19-update-summary-federal-emergency-paid-leave-benefit-law
[3] U.S. Office of Personnel Management on COVID-19
[4] The World Bank Support to the 10th Ebola Outbreak in the Democratic Republic of the Congo – World Bank
[5] Liberia nurses threaten strike over Ebola Pay – Associated Press
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