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How does your hospitalist compensation plan measure up?

Hospitalist Leadership Connection, October 28, 2009

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Hospitalist program managers should judge any proposed compensation plan based on the following attributes:

Easy to understand: It should be easy for the hospitalists and administrators connected to the practice to describe how the compensation works and the rationale behind it.

Easy to defend in public: A good compensation plan should not cause embarrassment or concern if other hospital personnel, patients, or a malpractice jury learns how the compensation system works. For example, most hospitalists would be uncomfortable with a malpractice jury knowing that they are paid a bonus for decreasing length of stay if the patient bringing the suit had problems that could be connected to his or her early discharge.

Complies with laws and regulations: The compensation plan must be within fair market value and meet other standards. This may require review by legal personnel to verify compliance.

Can be modified over time: A practice should anticipate that over time, the schedule and the way work is distributed among providers may change significantly. It is best if a compensation plan does not need to be rewritten every time such changes are made. Ask whether the plan will continue to work if the practice adds more providers or implements a schedule that is significantly different from the current schedule.

Rewards good work: Ideally, the compensation methodology should support the practice goals and encourage the hospitalists to think of themselves as owners of the practice, even if they are contractors. Any variable or incentive component of the compensation should be large enough to influence behavior, and incentive targets should be set so that they are not too easy or unreasonably difficult to achieve.

This tip is adapted from The Hospitalist Program Management Guide, Second Edition by Kenneth G. Simone, DO and Jeffrey R. Dichter, MD, FACP, now available at a reduced price!

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