Tips on structuring a smart physician pay plan

Throw out the cookie cutter

With physicians having to work harder to maintain their paychecks, compensation questions can lead to serious conflicts among colleagues.

Robert C. Bohlmann, a principal in the Medical Group Management Association (MGMA) Health Care Consulting Group in Englewood, CO, offers some tips on the fundamentals that make a compensation plan successful:

Cookie-cutter approaches don’t work.

No one "canned" approach works for everyone. "I know of a heavily capitated group that implemented a cookie-cutter plan which lasted until the administrator blew the whistle, saying, If we keep on like this, we’ll go broke because nobody is working,’" Bohlmann says.

No plan will satisfy everyone.

The best you can hope for in an "optimum compensation plan" is a consensus of acceptability, not necessarily an overwhelming endorsement by each and every physician.

The plan must support practice and organizational goals.

If it doesn’t, you are just driving with the brakes on.

It must include adequate work or production incentives.

Remember, you want to encourage and reward hard work, not make the goals so high or low you stifle the practice’s overall work ethic.

The plan must peg compensation to the market.

"If a compensation plan doesn’t pay each specialist a reasonable comparative income consistent with productivity, it’s doubtful that the plan — or the group — will survive," he says.

It must reflect the dynamics of the practice.

To develop a workable plan, first answer these questions: What are the unique features of practice and market? Where does most of our revenue come from? Who are our main payers? What is our patient mix? How important is managed care to overall reimbursement?

The plan must take governance into account.

Poor governance is the Achilles’ Heel of any physician organization. Most groups have moved away from an environment where everybody is boss, but some of this philosophy remains in many groups. "As medical organizations expand in size, a control body is necessary to facilitate success," says Bohlmann.

It must deal with the issue of part-time physicians.

Frequently, part-timers don’t fit well into a compensation plan, he says. When part-timers are present in a practice, Bohlmann prefers a negotiated pay arrangement for them. "In the final analysis, successful organizations require that the bulk of their physicians be full-time and producing at a level that exceeds median effort," he stresses.

The plan must comply with Stark rules.

You can create big problems if you don’t adhere to this set of restrictions, especially when it comes to ancillary services.