Knowledge Expansion

Insider: Lessons learned from implementing a variable physician pay model

Podcast

Compensation & Benefits

Operations Management

Provider Compensation



MGMA senior editor Daniel Williams, MBA, MSEM, recently spoke with Kristen Adams, MA, CMPE, Department Administrator, Anesthesiology, Weill Cornell Medicine to discuss her recent experience of moving a 110-member academic department from fixed to variable pay. During this podcast, listeners learned how to outline strategic steps in implementing a new compensation system for physicians, as well as prepare, execute and manage expectations during implementation of a new compensation system.

Q: Tell us a little bit about your background and career in healthcare.

A: I started in billing and revenue management in the surgical specialty of Urology, and I worked there for seven or eight years and then took a role in anesthesiology, and so I've been here at Weill Cornell my whole career. It has been a new job about every six months, I think, between aggressive changes in healthcare over that time period and new systems. It stays exciting and just really tests your knowledge on an ongoing basis.

Q: One of the biggest challenges that practices face is developing compensation plans that can help reflect the overall strategic vision. Why is that?

A: At Weill Cornell, as an academic medical center, it's very difficult to manage your strategic vision with respect to compensation, because you have so many competing priorities. You're trying to incentivize and reward great clinical behavior. At the same time, you're needing to reward and encourage academic time and development for grants and for the institution. So, to try to come up with some compensation plan that your faculty or physicians can view as being consistent and fair, is very difficult.

Q: As you mentioned, physician compensation planning is a complex situation and it was made even more complex by choosing to go from a fixed to a variable pay model. How'd you decide to go in that direction? What type of research was involved to help you reach that conclusion?

A: When we received a notice of our new chairman starting, obviously, as a new leader, he wanted to take a look at what was developed under the previous chair and he had a new strategic vision.

The other driving force is we're an anesthesiology department and the opening of ambulatory care centers and the shift to have so much more volume moving towards ambulatory care means that we need to staff a lot more operating rooms during the day, but we're not necessarily increasing the need to have on-call physicians available at night. These factors caused us to look at different pay structures.

Q: So, when you put together a strategic plan like this, did you form a committee or a task force? How did you develop the plans here and who comprised that group?

A: I think that anyone looking to change something as sensitive as compensation needs to make sure that it does align with not only everything that you're looking to achieve, but you also want to make sure you're not disrupting the current plans. For our committee, we had five people working on the plan, including me, as the department administrator, and the chairman and the vice chairs. And as we developed concepts, we were careful to reach out to a slightly larger circle of people, maybe another four or five, but we would only be asking them for input on a very narrow scope of the project.

Q: You had mentioned that you had a three-year horizon. Talk about that timeframe.

A: By having a three-year plan structure set out before us, we then made sure to be very conservative in overall increases as we were developing the plan, so that compensation for faculty was up only very slightly for the first two years, which gave us a cushion as we rolled out the new formulas that would change the way people were paid.

Q: You had talked to me that you have 110-member academic department. Is that how many physicians you had that you had to consider for the new pay model?

A: At the present time, we do have 110 clinical faculty. In addition to that, we have another 110 certified registered nurse anesthetists. They are not our employees, but they are provided by the hospital and work as part of the care team.

As an academic medical center, we also have 78 residents and a four-year program that are in the ORs (operating rooms) working alongside our physicians as part of the care team. And we have 23 anesthesia technicians.

Q: Now, once you made that change to variable pay, what did you do to measure it? What did you do to make sure things were working that you were following the path that you had set up or what needed additional attention?

A: When we launched it,each faculty person’s total compensation for the prior three years had been gathered into an Excel sheet that was based on pivot tables. And from there we projected out the variable pay.

Fortunately for us, because we had held increases to be very moderate in the prior three years, even though some of our projections were off by a bit, faculty were still ahead of what they would have made under the old plan. 

Also, we were using an open door policy and making sure that all the reports were interactive. So that when a faculty member came with a question, we were able to meet with them within 24 hours to provide the data because everything was created as a relational database so that we could just pull it up and show the points that they were asking about.

Q: Are there any best practices as you reflect on the process that you'd suggest to other organizations if they're looking at making a similar move?

A: I definitely recommend the idea of a three-year horizon if the forces of the market environment allow for that. Because, to be able to save up for the change, and to be able to thoughtfully think, “we're going to start creating it, we're going to have it ready to go and then implement it in three years,” really made a lot of sense. I also recommend making sure you get the right people in the room to develop the strategic plan and to keep that core group as small as possible. Because I believe the smaller the group, the more nimble it can be and the more time can then be put into creating needed tools along the way.

Additional Resources:

If you’re interested in learning more on physician compensation or hearing Kristen Adams speak live, you can join us at MGMA’s Annual Conference October 13th-16th in New Orleans. Registration is now open. For more information and to register visit MGMA.com/bigeasy19
 
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