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Keys to successful compensation planning

Hospitalist Leadership Connection, August 17, 2010

Physician compensation planning requires a process that ensures that physicians drive positive outcomes. Some suggestions for guiding the process of creating a compensation plan and ensuring a successful outcome are detailed below.

• Physician direction. Recruit opinion leaders to assist in the design of the compensation plan.
• Market relevance. Pay competitive income for competitive work.
• Flexibility. Adopt a plan that flexes with the market annually.
• Transition. Plan design must include analysis of the effort of the transition to the new structure and may require temporary income protection.
• Communication. Communicate fully and frequently to all physicians.
• Simplicity and objectivity. Establish understandable, objective, and measurable incentives.
• Alignment of incentives. Align physician and organization incentives.
• Respect for culture. Respect the differences in the decision-making process and organizational style within the medical group.
• Resist making special deals. Once the planning process is complete, stay true to the decision that the committee made.

Creating or modifying a compensation formula is a technical and political challenge because physician compensation is inherently an emotionally charged issue. This necessitates a very rational and fact-based approach to keep emotions from clouding sound decision-making.

In surgical hospitalist programs, specifically, the effort should be led by a balanced, thoughtful group of representatives that includes surgeons and hospital executives. These leaders should include and be supported by individuals experienced in the type of analysis and process management that this undertaking requires. To achieve consensus, physicians must first understand how their compensation compares to the market benchmarks. They also must understand the changes to their income that are likely to occur and how compensation will compare to the market once the model is implemented. Finally, it is imperative that the compensation model creates incentives that will motivate physicians toward behaviors that are consistent with the greater objectives of the organization.

The above excerpt is adapted from The Surgical Hospitalist Program Management Guide: Tools and Strategies for Executives and Physicians, by John Nelson, MD, FACP; John Maa, MD, FACS; and foreword by Robert M. Wachter, MD, published by HCPro, Inc. Download a free sample chapter online at www.HCMarketplace.com.

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