The straight-salary model is modified by some organizations with the addition of a bonus or incentive. In fact, this is the most prevalent model in today’s hospitals and practices. In this plan salary accounts for a certain percentage of annual compensation (80 percent, for example). Bonus payments or other incentives make up the remaining portion (20 percent). There is a definite advantage to this system that accounts for its popularity among many physicians and administrators. This model takes care of the problem existing with straight salaries by rewarding extra effort. Income can be increased by excellent performance. Also, additional income or incentives can be earned for non-clinical activities like research, teaching or administrative duties.
The problems? The guaranteed amount of salary is reduced. This means a varying degree of risk, depending on the organization and its performance. If the practice suffers financially over the year, a physician’s bonus or incentives may not be available, no matter if the physician performed with excellence. In addition, bonuses or incentives are often based on quality indicators that are highly subjective. These quality indicators include patient satisfaction scores, utilization reviews, contributions towards practice administration and more. Alternatively bonuses may be based on insurance guidelines or other pay-for-performance statistics that may not allow leeway for special circumstances (an individual needs medications outside guidelines, for example).
A final salary-related model is called equal shares. In this model, practice or clinic expenses are paid, and all remaining revenues are split equally among the physicians. This model is easy administratively, and discourages over-utilization. But this model also suffers from the disadvantages of a straight-salary program. It assumes all physicians are equal in skills and performance, and can adversely affect motivation.
Types of Packages: Productivity Based
There are many variations of productivity-based compensation. In most, practice overhead is allocated equally among the physicians. Doctors are then paid a percentage of clinic billings or collections.
Another option is payment based on resource-based value scale (RBRVS) units, assigned to specific procedures or visit types. Crucial to these models is patient mix. Pay can vary widely depending on a physician’s patient load – commercially insured, Medicare/Medicaid insured or uninsured.