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Understanding
physician compensation models is a lot easier than it used to be. Small
comfort, perhaps, for some physicians navigating the world of
contracts, performance bonuses, patient loads and more. But old models
used to rely on formulas that would scare anyone long-removed from
calculus. They would attempt to quantify the slippery concepts of
corporate citizenship, committee duty, or governance responsibilities.
In short, they were a mess.
Today’s
compensation models are relatively simple by comparison. They are based
on typical salaries per region, or on physician surveys conducted by
management organizations, like the American Medical Group Association.
There is a salary or revenues, and there are potentially incentives or
bonuses. The
question becomes – what are these incentives? How are bonuses arranged
and distributed? Are the criteria reasonable and/or attainable? How
does productivity and efficiency, the new buzzwords, come into the
picture? In
this article we look at typical compensation packages and their
components. We will also analyze the advantages and disadvantages of
each system.
Types of Packages: Salary Based
Usually
the hallmark of large HMO’s, academic settings, large corporations, and
physician-owned practices, salary-based compensation is simple.
Considering the local market (location and organization) and position
type, a set figure is offered as a salary. The salary may or may not
incorporate figures based on the physician’s merit or qualifications.
Often salaries will be based on physicians’ length of time in the field
and any academic titles.
This
plan offers a relatively worry-free and secure environment. Physicians
will know their salary from the beginning of their employment.
Theoretically, they will not feel the need to compete with their
colleagues, focusing instead on effective patient care. But this can
lead to the major disadvantage of this compensation model. Since
physicians are secure and do not need to compete with one another, this
arrangement can discourage extra effort or productivity. If there are
no rewards beyond the set salary, or flexibility for extra
compensation, doctors may come to feel extra effort is not worth it.
Minimal effort may become the norm.
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Physician Practice 
