Performance Pay for MGOA Physicians Laman Abdullayeva Naureen Dhukka Rachna Gaur Porscha Jackson Jessica Saenz

Overview Background of the Case Initial Compensation Plan Review New Proposed Plan Discussion Recommendations Questions

Background MGH MGOA Third hospital founded in United States Long history of providing outstanding clinical care Prestigious research & teaching hospital MGOA Harvard Medical School professors World reputation for care & research Received grant funding for research & salary Worked 90-100 hours per week Provides services to all socio-economic groups

Key Players

Case Overview Financial stability of MGOA Annual financial deficits Money flow of health care industry Costs, productivity, & compensation of MGOA physicians Roles of nonprofit environment & teaching hospital Compensation of MGOA physicians vs private practitioners

Current Plan Flat Salary Salaries were adjusted based on seniority and very loosely on productivity “Protected” time for research Academia-Faculty Compensation Plan Promotion system similar to tenure

Current Plan Challenges Some doctors were bringing in substantial profits in, others were costing the group Strategic alignment of goals Clinical productivity Physicians outcome needed to be rewarded appropriately

Rubash’s Initial Steps 1. Open and frank meetings 2. Negotiated with MGH to secure 10% time increase in operating room 3. Group administrative functions were enhanced 4. Non-academic group compensation plan Meeting Flexibility, time/cost Productivity focus: salary/performance adjustment

Proposed Compensation Plan Doctor’s base salary Maybe you could add a picture here!!!!!!!!!!!! Development fund tax Bonus NAUREEN’S SLIDE Base salary adjusting system

Proposed Compensation Plan Set semi-annually Varies at 1999 levels ranging from $200,000 to $300,000 Doctor’s base salary Development fund tax Bonus 1999???? NAUREEN’S SLIDE Base salary adjusting system

Proposed Compensation Plan Doctor’s base salary Development fund tax Bonus NAUREEN’S SLIDE Base salary adjusting system

Proposed Compensation Plan Equals 50% of profits generated Is a subject to change Bonus= r*(R-OC-GC-S) R: revenues generated by professor after development tax OC: costs of the physician GC: physician’s share of general group costs S: physician’s base salary r: bonus rate Doctor’s base salary Development fund tax Bonus LAMAN Base salary adjusting system

Proposed Compensation Plan Doctor’s base salary Development fund tax Bonus Base salary adjusting system

Compensation Plan Analysis PROS Long-term fix through Development Fund Short-term fix through employee empowerment Productivity focus through bonuses

Compensation Plan Analysis CONS Taxing high performers & rewarding low performers Inconsistent bonus rate No “protected” research time Murky status of new physician status Complicated & costly structure

Recommendations

Recommendation Overview MAIN ISSUES Instability & uncertainty in the bonus rate level Unclear status of “protected” research time Strategic alignment of goals Feedback SOLUTIONS Performance Based Bonus Research time flexibility Performance measures Physician’s survey

Performance Based Bonus Tied to the performance. Each doctor has enough control on their work outcomes. Every doctor can get bonus if he/she is able to bring profit. Implementing a pay-for-performance (P4P) program holds the promise of stemming the tide of rapidly-rising Medicare costs. By penalizing inefficient physicians and rewarding efficient ones, Medicare could potentially save millions or billions of dollars each year. The successful realization of such a system requires not only that efficiency ratings are comprehensible to both providers and policymakers, but also that they affect provider behavior

Strategic Alignment of Goals: Performance Measures Indicator Maximum Points Productivity Revenue earned > cost incurred 10 Safety Reduction in infection rates through better cleaning standards Teaching residents and medical students 9 Patients treated with quick turnaround 8 Grants Article published 7 Total Points 45 This promotes the relationship between doctor’s pay and performance. It also promotes equal distribution of compensation. The better they perform, the more they earn.

Performance Based Bonus Performance Points Bonus (percent of individual profit) High: 37-45 40% Average: 32-36 25% Low: ≤31 No Bonus physicians should be rated by how well they beat benchmarks for delivering chronic care, standards that are set after rigorous testing and review. The top-performing doctors should be rewarded for their performance.

Feedback? Employees view of Compensation Plan Specificity -Feedback works best when it relates to a specific goal. Establishing employee performance expectations and goals before work begins is the key to providing tangible, objective, and powerful feedback. Performance productivity -taking feedback will make doctors feel as if their opinions matter, boosting their productivity. When doctors get to safely share their appraisals, they feel valued. Contributing to your workplace gives a measure of ownership. Job Satisfaction- Collecting feedback from doctors will reveal what they of the hospital they represent. Get their perspective about the opportunities for advancement and the hospital’s benefits package. This information is helpful to shape future perks, operating procedures and training programs. Idea: split slide into 2 sections (flexibility time and survey)