How health systems approach physician compensation


Physician compensation can be one of the most challenging aspects of formulating a business plan when healthcare systems and practices align. But success in this area often comes from keeping things simple, transparent and straightforward, according to Susan Stowell, a partner at Stroudwater Associates, a healthcare consulting firm based in Portland, Maine.

Stowell offered her remarks earlier this month during an educational session at a meeting of the Maine chapter of the Healthcare Financial Management Association.

What are some things organizations can do to achieve successful physician compensation plans? Stowell provided the following suggestions for health systems:

  • Doctors and the healthcare systems that employ them often have competing views of what the physician compensation plan should look like. Physicians should be included in the compensation plan design process.

  • Recognize that your compensation plan will have to be somewhat fluid in order to meet internal and external changes over time.

  • Move away from percentage-based compensation models toward incentive-based models.

  • For every incentive, there must be a valid way of measuring performance. Keep in mind that having too many incentives diffuses their value.

  • Structure your compensation plans around your organization’s overall goals.
  • Understand your local market.

  • Understand your organization’s capabilities and limitations. If your organization’s technology systems are not set up to support your compensation plan, you won’t be able to meet your goals or properly implement the plan.
  • Tell your doctors where you expect them to spend their time.

  • Continually monitor your compensation system and measure and report data.

  • Share data with your doctors. They can’t change their behavior if they don’t know what needs changing.

“Accept the fact that you will not have a perfect compensation system,” Stowell advised. “You’re always going to have unintended consequences that you don’t want, and you’ll have to work through those.”

Follow Stephanie Bouchard on Twitter @SBouchardHFN.