Compensation Models

Making productivity a component of physician salary can be challenging.

Increasingly, my health system is looking for ways to incorporate an incentive component into physician compensation models. Scaling a component of physician compensation with productivity may help to align physicians with the financial imperatives of the health system but can carry with it perverse incentives and unintended consequences. Our early experiences with this approach have lead to physicians selecting simpler cases to engage in (when they have the option). It has also caused some divisiveness and seems to be an overall impediment to a healthy team dynamic. On the other hand, it has caused some less productive team members to push themselves and become more active.

Have others had success with a productivity-based compensation model while avoiding the pitfalls?


Increasing Length of Stay


How do you begin to create an organizational culture?

Participant comments on Compensation Models

  1. Our organization has deliberately chosen not to incentivize physicians on productivity but rather on outcomes, total cost of care, and patient access. By measuring these 3 domains, we indirectly get to the issue of productivity without the negative consequences you describe above.

  2. You will not be able to implement a productivity-based compensation model without the pitfalls. Like Sharon says, you should focus on quality measures including patient access. By doing so, physicians will be interested in organizing their work flow. Succesfull implementations of LEAN learns us that by focussing on output, you will get an efficient process and consequently good productivity.

  3. We also to do not incentivize clinicians, however our chief nurse(who is also accountable for procurement), CMO and clinic CEO have their benefits based on productivity too. It is also a dilemma for them – to spend less but provide the same level of treatment, however we manage it in a way – we have a list of must equiptment and materials to work with and they ensure they reduce ‘waste’..

  4. This is an incredibly complex and challenging question. I have sat on our organization’s compensation committeee for past few years and this issue has been discussed at length. One potential solution is setting the productivity goals at the divisonal or departmental level. This works for bigger departments that work in teams (OB, Anesthesia, Primary Care, Pediatrics, etc..). The value based metrics can be set at the individual or department level as well. These VBMs can be used to align physican and APC groups with non-financial goals of the oragnization (for example: quality, education, access, and cost control). This allows for better functioning teams at the expense of a completely transparent comepensation plan (i.e RVU x $RVU= Compenstaion).

    This very issue and many others are being discussed this week at the Sullivan Cotter coinefernce in Florida.

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