# Try following these formulaic trends

## Choose from popular compensation plans

Nicholas Giampetro, Esq., a lawyer with the Towson, MD, law firm Giampetro/Levin, says that in his practice, he sees more medical groups opting to pay doctors based on productivity. "Unless you live in an area where there is no managed care, or unless you are a very small group, then you don’t see an equal split of income any more."

Productivity-based plans, however, can be as numerous as the number of practices. Among the more popular are these three:

1. Partial guarantee.

In these cases, a portion of the salary pool is split equally, with physicians guaranteed a minimum salary. The rest of the pot is then split depending on how much each physician contributed to the practice as a whole.

For example, Andrew Radoszewski, MBA, MPH, a consultant in Orlando, FL, says he administered a 10 physician cardiology practice where 75% of the pool was split equally, and the other quarter fluctuated according to productivity. "This hurts the higher producer because not as much money is coming from the work he or she does. But it worked for us."

If there was a \$2 million compensation pool, then \$1.5 million would be divided equally among the 10 physicians, and the remaining money would be distributed based on productivity. If one physician brought in 20% of the revenue, then he or she would get 20% of that \$500,000 or \$100,000 added to his or her portion of the guaranteed salary. (For an example of this formula, see chart, p. 90.)

Radoszewski says a benefit from using this kind of formula is the allowance for incremental changes in the proportion based on productivity. "Doctors can get used to it over time." In the program’s second year, half the pool was divided equally and the other half based on productivity.

2. RVU system.

This can be very complex, says Giampetro. This system involves a guaranteed proportion of income based on a physician delivering a specific number of relative value units (RVUs) to the practice. The RVUs are based on the medical work the physician does.

"I’ve only seen this done with practices that have been purchased by hospitals," he says. "Then, you have the hospital guaranteeing a certain income to the physicians based on their delivering the same number of RVUs as prior to the acquisition."

Another example of this type of system involves an anesthesiology practice with which Giampetro works. "They predicate income division based on American Society of Anesthesiology (ASA) units a physician completes." Specific procedures each have a different number of ASA units assigned to them, he notes.

Under an RVU system, additional RVUs bring additional money to the doctor and may be awarded for nonclinical work, such as service on an administrative committee. What is hard about this system, says Radoszewski, is getting practices to agree on how many RVUs certain things are worth. "It’s always worth more to the person doing it than to the rest of the physicians," he says.

If you want to reward physicians for other work they do  representing your practice on a hospital committee or with a particular payer  then you can also choose to do that with an administrative stipend that is not based on RVUs, says Radoszewski. "But you will still have arguments about that amount."

3. Base plus productivity and quality bonus.

This is the latest trend, says Jonathan Edelson, MD, chairman and chief executive officer of Advanced Health Corporation, a Tarrytown, NY-based practice management company. This gives a base salary to physicians and then some proportional reward for productivity.

But it also rewards physicians who meet certain peer and patient satisfaction criteria. "It might be based on points for those things, with each point garnering a certain amount of money, or it might be a flat rate for meeting certain goals," he says.

The general proportions used, Edelson says, are 70% of the available salary pool divided up as base salary, with 18% for productivity, and 12% based on meeting satisfaction criteria.