How often should a facility revisit its compensation plan/formula, and what should it look for (or what should the process be)?
An organization should revisit their compensation plan/formula at least annually. Additionally, a projection of the impact on the compensation plan/formula should be conducted prior to embarking on any project that significantly impacts the organization financially. Prior to recruiting new physicians to the organization is important to assess the ability of the existing and new recruits to earn market compensation through the compensation plan/formula.
The process begins by collecting the productivity and total earnings of each physician and then comparing your results to that of a market survey that best reflects your organization. Variations from the market results should be reviewed. If the compensation plan/formula varies significantly from market the organization needs to investigate the reasons why this is occurring. If all physicians and specialties are below market, you may have a revenue and/or expense problem. If one or a few specialties are below market, while others are over market, you may have a compensation plan/formula problem.
The review of your compensation plan/formula results to market survey results is a good diagnostic tool to assess the functionality of the plan/formula and the ability of the organization’s physicians to be productive and cost effective.
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