List of
Exhibits
Introduction
Historical
Context
Today’s Medical Practice Environment
External
Challenges
Internal Challenges
The Authors
Overview of this Book
PART I Physician Compensation Plan
Development
ONE Do You Need a New Compensation
Plan?
A Practice Barometer
Medical Practices
That Have No Choice
Medical Practices That Seek Alignment
Medical Practices in the Middle
Recommended Action for
Medical Practices
TWO The Compensation Plan Development Process
Project Sponsorship
Compensation Planning
Committee
Committee Composition
Charge to the
Compensation Planning Committee
Compensation Plan Development Time
Line
Role of a Consultant in Plan Development
Committee
Operating Agreement
Communication Plan
The 12-Step
Committee Process
THREE The Life Cycle of Compensation Plan
Change
Life Cycle Phases
Phase 1 – Today’s
Plan
Phase 2 – Tomorrow’s Potential Plans
Phase 3
– The New Plan
The Complexity of Change
Administrative
Readiness for a New Compensation Plan
FOUR Compensation Plan
Decision and Implementation
Compensation Plan Checklist
The Decision-Making Process
Decision Making in
Private Medical Practices
Decision Making in Hospital-Affiliated
or Hospital-Employed Practices
Decision Making in Academic
Practices
A Ballot Approach to Decision Making
Implementation Plans
Incremental Adoption
Blended Adoption
Segmented Adoption
PART II State-of-the-Art Strategies
Introduction
FIVE Compensation Plan Options – The Compensation Plan Matrix
Culture and Compensation
Financial Realities
and Compensation
Compensation Plan Dimensions
The
Cultural X-Axis: Team-Oriented to Individualistic Plans
The
Financial Y-Axis: Revenue-to-Expense Treatment
Team-Oriented
Plans
Individualistic Plans
Middle Ground Plans
The Compensation Plan Matrix
Plan “Architectures”
Based on the Nine Elements
Revenue Treatment
Funds
Flow Models
Revenue Distribution Methods
Expense
Treatment
Gaining Perspective on Current and Potential Future
Plans
SIX Compensation Plan Architectures
Team-Oriented Architectures
Architecture A – Unit-Based
Plans
Architecture B – Guaranteed Share Plans (Base Plus
Incentive)
Architecture C – Percent-Shared, Percent-Production
Plans
Architecture D – Pure Production-Based Plans (No Expense
Allocation)
Architecture E – Graduated Revenue Allocation
Plans
Individualistic Architectures
Architecture R –
Pure Production-Based, Combined with Strict Cost Accounting Plans
Architecture Q – Pure Production-Based, Combined with Modified Cost
Accounting of Expenses (Shared and Based on Utilization) Plans
Architecture P – Pure Production-Based, Combined with Negotiated
Expense Allocation (with Production-Based Component) Plans
Architecture O – Pure Production-Based, Combined with Equal Share
Expense Allocation Plans
Architecture N – Pure Production-Based,
Combined with Graduated Expense Allocation Plans
Architectures in
the Vast “Middle Ground”
SEVEN Measuring Physician Work and
Effort
The Context for Physician Productivity
Influences on Physician Productivity
Productivity’s Negative
Effects
Measures of Physician Work and Effort
Measuring
and Rewarding Quality
Benchmarking Physician Productivity for
Compensation Plan Development
Purposes and Uses of Benchmarking
Availability, Utility, and Validity of Benchmarking Resources
Benchmarking Steps
Physician-Specific Factors
and Benchmarking
Examples of Benchmarking for Compensation Plan
Purposes
Example 1: Physician Compensation and Key Production
Measures
Example 2: Compensation-to-Production Ratios
Example 3: Compensation in the Context of the Practice’s Financial
Position
Example 4: Academic Practice and Clinical Full-Time
Equivalency (CFTE) Analysis
EIGHT Pay-for-Performance (P4P) and
Physician Compensation
Background
The P4P
Debate
Aligning Compensation with Reimbursement
P4P
Methods and Measures
P4P Compensation Strategies
P4P Revenue Strategies
P4P Performance Measures
Physician Profiles
P4P Documentation
Examples of P4P Plans
Example 1: Direct Link between
Reimbursement and Disbursement
Example 2: Separate Incentive
Pool and P4P Framework
NINE The Legal Element
Two Primary Bodies of Relevant Laws
Laws Governing Federal
Health Care Programs
Internal Revenue Code Requirements
Compensation and Context – Applying the Laws
A Diagnostic
Matrix
The Primary Laws (The Stark Law, the Anti-Kickback Statute,
and the Internal Revenue Code) Applied in Two Contexts
Compensation in Bona Fide “Group Practices”
Compensation in “Nontraditional” (e.g., Hospital-Owned and
Hospital-Operated) Group Practices
Compensation in Settings Other
than Bona Fide “Group Practices”
Indirect Compensation
Arrangements Involving Hospitals and Organizations Other than Group
Practices
The Role of Legal and Accounting Counsel in Compensation
Plan Development
TEN Special Issues in Physician Compensation
General Framework for Rewarding Nonclinical Production
Direct Method – Payment for Nonclinical Production
Activities
Indirect Methods – Performance Expectations and
Physician Recognition
Special Issues in Physician Compensation
Issue 1: Methods to Identify Base Salary Levels
Issue
2: Compensating Physicians for Satellite and Outreach Activities
Issue 3: Compensating Physicians for Leadership and Administrative
Services
Issue 4: Compensation Plans for New Physicians
Issue 5: Compensation Plans for Nonphysician Providers
Issue 6: Market Differences in Subspecialty Compensation Levels
Issue 7: Nonobjective Performance Criteria in Compensation Plans
Issue 8: Compensation Plans Involving System-Wide Incentive Measures
ELEVEN Physician Transition Plans – Physicians in Part-Time,
Slowdown, and Similar Status
Practice “Transition” – What
and Why
The Growth of Physician Transition Plans
Developing a Transition Plan
Goals and Principles of
Transition Plans
The Assessment Phase
The
Development Phase
TWELVE Industry Trends in Physician
Compensation
The Issues and Challenges
Trends in
Physician Compensation Arrangements
Trends in
Individualistic/Production Plans
Trends in Team-Oriented Plans
Trends in Multispecialty Practices
Trends in
Hospital-Affiliated Practices
Trends in Academic Practice
Plans
Reemergence of Gainsharing
PART III
Compensation Plan Examples
Introduction – Compensation
Plan Examples
The Compensation Plan Matrix and Plan
Architectures
THIRTEEN Compensation Plans in Bona Fide Group
Practices
Team-Oriented Architectures and Examples
Group Practice Architecture A – Unit-Based Plans
Group Practice Architecture B – Guaranteed Share of Revenues or
Income (Base Salary) Plus Incentive Plans
Group Practice
Architecture C – Combined Equal Share and Production Allocation of Revenues or
Income Plans
Group Practice Architecture D – Pure
Production-Based Plans
Group Practice Architecture E – Graduated
or Negotiated Revenue (or Income) Allocation Plans
Individualistic
Architectures and Examples
Group Practice Architecture R –
“Strict” Cost Accounting Plans
Group Practice Architecture Q –
Pure Production with “Modified” Cost Accounting Plans
Group
Practice Architecture P – Pure Production with Negotiated Expense Allocation
Plans
Group Practice Architecture O – Pure Production with Equal
Share Expense Allocation Plans
Group Practice Architecture N –
Pure Production with Graduated or Negotiated Expense Allocation Plans
“Middle Ground” Architectures and Examples
FOURTEEN
Compensation Plans in Hospital-Affiliated Practices (Direct Employee,
Hospital-Affiliated Group and “Contracted” Group)
Hospital Example 1 – Straight Salary Plan
Hospital
Example 2-A – Compensation per WRVU Plan
Hospital Example 2-B –
Compensation per WRVU Plan
Hospital Example 2-C – Compensation
per WRVU Plan – Indirect Compensation Arrangement
Hospital
Example 3 – Percentage-Based Compensation Plan
Hospital Example
4-A – Base Plus Incentive Plan
Hospital Example 4-B – Base Plus
Incentive Plan
Hospital Example 5 – Graduated Compensation per
WRVU Plan
Hospital Example 6 – Base Salary with Graduated
Compensation per WRVU Plan
Hospital Example 7 – Hourly Pay for
Physician Professional Services Plan
Hospital Example 8 –
Indirect Hospital or Contracted Group with Cost Control Plan
Hospital Example 9 – Indirect Hospital or Contracted Group Using
WRVUs and Cost Control Plan
FIFTEEN Compensation Plans in
Academic Practices
Faculty Practice Plans Defined
Contextual Issues in Academic Practices Today
Key Success
Factors for Academic Practices
Increased Focus on Clinical
Service Performance and Production
Evolution of Faculty Member
Compensation Expectations
Evolving Organizational and
Administrative Structures
Evolution of Faculty Practice
Plans
Approach to Faculty Practice Plan Design
Key
Components of Faculty Practice Plans
Funds Flow Models
Faculty Practice Plan Architectures
Faculty Time Spent in
Clinical Activity – CFTE Levels
Faculty Practice Plan Examples
Faculty Practice Example 1-A – XYZ Plan with Direct Faculty Revenue
and Expense Allocation
Example 1-B – Adjusted Straight Salary
Plan
Example 1-C – Mission-Based Plan
Faculty
Practice Example 2-A – XYZ Plan with Z Based on Combination of Departmental and
Individual Clinical Performance
Example 2-B – Z Based on
Individual Clinical Production Only
Example 2-C – Z Based on
Individual Points and Weights
Example 2-D – Use of Clinical and
Academic Incentive Pools
SIXTEEN The Special World of Hospital
and Academic Practices – Assessing Reasonableness and Promoting Compliance
Applicable Standards
Understanding Market Data
Evaluating the Data
Measuring to Median
Compensation and Production Relationships in the Marketplace
Applying Market Data to Evaluate Questions of Fair Market Value and
Reasonableness
Third-Party and Internal Assessments
Conclusion
Additional
Resources
Index