There are all kinds of building blocks you can put together, says Ronald L. Vance, JD, a Principal with EthosPartners, Suwanee, Ga., "but at the end of the day, you want at least two things in every compensation package design: a base salary and an incentive opportunity." (See Figure 1.)

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1. "Lessons Learned." The Extremes Have Generally Failed to Net Desired Group Behaviors. Source: Ronald L Vance, JD, EthosPartners, 2009. Used with permission.

"Usually this opportunity is based on productivity, often measured by work relative value units (WRVUs), or professional collection. Most designs also include an opportunity for "pass-throughs", including medical directorships or other stipends for call coverage, teaching, research and other approved activities. But I am a huge fan of incorporating a fourth bucket, of quality incentives based on patient satisfaction, clinical outcomes, and/or efficiency.

"Because, given the inevitable change in reimbursement to bundled payments (and given what just makes sense, behaviorally, for a good physician organization), you need to promote a certain level of teamwork. Neither of the most extreme compensation models do this." (See Figure 2.)

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2. Total Potential Compensation. Source: Ronald L Vance, JD, EthosPartners, 2009. Used with permission.

Most hospitals don't want physicians to be paying too much attention to whether a patient is indigent, self-pay, or commercially insured, says Vance. "They don't want cherry-picking and they don't want physicians closing their practice to certain kinds of patients, which would most likely degrade the organization's charitable mission."

Again, this points to the center of the compensation spectrum (P4), in which a defined base is combined with periodically adjusted productivity and other, nontraditional incentives such as leadership and clinical outcomes.

"Defining the minimum work standards for compensation is the first step, but you have to go beyond that; you have to go beyond productivity, or 'eat what you kill' motivation. Once the expected CMS reforms are in place and commercial payers follow suit, the question becomes not just how much you do, but how well you do it."

Publication Date: Thursday, May 21, 2009