Is productivity-based pay a sore point?
Is productivity-based pay a sore point?
How one practice took the pain out of change
Frederick (MD) Medical & Pulmonary Associates faced a typical situation. The practice of two physicians and two nurse practitioners was expanding, says administrator Christy Carton. The two owners were taking on a new partner, as well as an associate. It presented the ideal opportunity for changing the compensation system to something that rewarded the physicians fairly for their efforts.
But finding a way to do that might be tricky — after all, some have said that the best a practice can hope for is to be equally unfair in divvying up pay and profits. "We were hoping to find a way to allow the physicians to both share in the benefits of the practice as it was, but also to grow and move forward," says Carton.
What they ended up with was a blueprint for the future growth of the practice that rewarded physicians for doing the work that they felt met the goals of the practice as a whole. Different kinds of encounters were weighted according to how they moved the practice forward. Carton says the process was virtually pain-free, since the blueprint came from the physicians themselves.
As an added bonus, the physicians are paying more attention to the business side of the practice, Carton says. "They measure themselves, not against each other, but against their own goals. And that is a good thing."
Prior to the change, Carton says the physicians simply divided up any leftover money at the end of the year. But with new physicians coming in, there was a concern over how fair that would be. And when they talked about how to divide the money, there were some disagreements — whether nursing home work, which involved more travel, should be compensated more than hospital visits, and whether the criteria should be patient encounters or revenue generation.
Objectivity needed
After talking with other physician groups and a few consultants to get their ideas, Carton brought in Virginia Health Care Consultants (VHCC) to facilitate the discussions. She says most administrators are too close to the physicians and the practice to be objective.
John Hayford, vice president of the Fairfax-based consultancy, started by getting the physicians to talk about their goals — both personal and practice. "The pressures of managed care have made practices realize they have to be fair and efficient," he says. "They have to grow the practice, and be rewarded for productivity that achieves that goal. They are dependent on each other for survival, yet they compete against each other."
For a total of six hours, Hayford worked with the physicians to determine how they saw the practice progressing. Did they want more hospital work, or less? Is there a physician who wants to slow down as he or she approaches retirement? What areas of the practice will attract new business? "Just getting them involved means they are more likely to buy into the final product," says Hayford.
Once they come up with an idea of what they want to reward, Hayford and his team take real historical data and plug in the numbers so that the physicians can see what the reality would be. Then, a computer program is created and the administrator or office manager simply has to plug in numbers.
Different practices will come up with different equations, says Hayford. For example, a four-physician practice budgets for a quarterly profit of $40,000. Physicians A, B, C, and D decide what aspects of their practice are important, and weight each one accordingly (see tables, p. 38). They have decided that office hours are important to their future, so they weight that aspect at 30%, meaning at the end of each quarter, 30% of the money will be based on their share of office hours. Thus whoever has the most office hours in that quarter will be rewarded with the greatest share of that 30%.
The administrator or business manager need only enter the data in monthly for the physicians. All calculations are made automatically by the program, Hayford says.
Give it time
Hayford recommends that practices try any new compensation system for a year — or six months at the very least. "You have to have time to adjust your patterns of practice," he explains. "And there are seasonal fluctuations that will alter one quarter adversely, but not another." If after that time they want to make a change in weightings, it is a simple matter.
The cost for VHCC’s program, which includes the facilitation, depends on the size of your practice. The base price is $2,000.
Carton says the program was well worth the money. "Sometimes, administrators are so close that we talk around things. Consultants are removed from the situation."
Whatever new compensation program you go with, she advises that you get all the stakeholders involved from the beginning. "Find out what is important for the personal and practice growth of you doctors," she says. "Listen, let them talk, and determine the goals of your practice."
Sources
• John Hayford, Vice President, Virginia Health Care Consultants, Fairfax, VA. Telephone: (703) 715-9610.
• Christy Carton, Practice Administrator, Frederick Medical & Pulmonary Associates, Frederick, MD. Telephone: (301) 663-0881.
Subscribe Now for Access
You have reached your article limit for the month. We hope you found our articles both enjoyable and insightful. For information on new subscriptions, product trials, alternative billing arrangements or group and site discounts please call 800-688-2421. We look forward to having you as a long-term member of the Relias Media community.