Lessons Learned Mistakes to Avoid & How to Survive Implementation of Funds Flow Georgia Brogdon, MBA, DHSc, FACHE, FACMPE Vice Chair, Finance and Administration Department of Medicine Medical University of South Carolina

Who are we?

Department of Medicine MUSCP Practice Plan Chairs Department of Medicine 280 faculty 10 divisions

What does Funds Flow mean at MUSC?

Gray arrow represents Dean’s Package, Hollings Cancer Center Support MUSC Funds Flow Model Previous State Medical Center [MUHA] I COM MUSCP Clinical Departments 1 Clinical GME 2 Admin Academic / Research 3 We currently do a lot of cross-subsidization internally, which leads to the constant negotiation we find ourselves in. The proposed changes will help us right-size the flow of funds for each of the missions we support, represented by multiple arrows The research funds flow is shown as 2 arrows to symbolize that the Dean’s Office will play an especially important role in directing funding toward our research portfolio For simplicity, we have not included funding from the college, Dean’s Tax, or Medical Student Teaching in this illustration Gray arrow represents Dean’s Package, Hollings Cancer Center Support

MUSC Funds Flow Model Previous State Future State Medical Center [MUHA] MUSC Health [MUHA, MUSCP & Other Entities] I I II III IVa COM COM MUSCP IVb Clinical Departments 1 Clinical Departments Clinical GME 2 Admin Academic / Research Clinical GME Admin Academic / Research 3 We currently do a lot of cross-subsidization internally, which leads to the constant negotiation we find ourselves in. The proposed changes will help us right-size the flow of funds for each of the missions we support, represented by multiple arrows The research funds flow is shown as 2 arrows to symbolize that the Dean’s Office will play an especially important role in directing funding toward our research portfolio

SOURCES OF DIRECT DEPARTMENT REVENUE – PRE FUNDS FLOW Clinical Education Research Leader Support Other Professional Fees State Tuition & Fees Allocation Grant Funding & IDC’s Endowment Income Technical Fees (cardiac nuclear scans) UME Teaching Fees Chair or Divisional Startup Packages Other Philanthropy Medical Directorships Supplemental Medicaid Service Contracts Infusion Revenue Strategic Manpower Startup Support External Contracts (VA & Dialysis Centers)

College of Medicine Funds Flow Pot SOURCES OF DEPARTMENT REVENUE - IN FUNDS FLOW Clinical Education Research Leader Support Other Professional Fees State Tuition & Fees Allocation Grant Funding & IDC’s Endowment Income Technical Fees (cardiac nuclear scans) UME Teaching Fees Chair or Divisional Startup Packages Other Philanthropy Medical Directorships Supplemental Medicaid Service Contracts Infusion Revenue Strategic Manpower Startup Support External Contracts (VA & Dialysis Centers) College of Medicine Funds Flow Pot

College of Medicine Funds Flow Pot SOURCES OF DEPARTMENT REVENUE - IN FUNDS FLOW Clinical Education Research Leader Support Other Professional Fees State Tuition & Fees Allocation Grant Funding & IDC’s Endowment Income Technical Fees (cardiac nuclear scans) UME Teaching Fees Chair or Divisional Startup Packages Other Philanthropy Medical Directorships Supplemental Medicaid Service Contracts Infusion Revenue Strategic Manpower Startup Support External Contracts (Dialysis Centers) College of Medicine Funds Flow Pot

College of Medicine Funds Flow Pot SOURCES OF DEPARTMENT REVENUE - IN FUNDS FLOW Clinical Education Research Leader Support Other Professional Fees State Tuition & Fees Allocation Grant Funding & IDC’s Endowment Income Technical Fees (cardiac nuclear scans) UME Teaching Fees Chair or Divisional Startup Packages Other Philanthropy Medical Directorships Supplemental Medicaid Service Contracts Infusion Revenue Strategic Manpower Startup Support External Contracts (VA & Dialysis Centers) College of Medicine Funds Flow Pot

College of Medicine Funds Flow Pot SOURCES OF DEPARTMENT REVENUE - IN FUNDS FLOW Clinical Education Research Leader Support Other Professional Fees State Tuition & Fees Allocation Grant Funding & IDC’s Endowment Income Technical Fees (cardiac nuclear scans) UME Teaching Fees Chair or Divisional Startup Packages Other Philanthropy Medical Directorships Supplemental Medicaid Service Contracts Infusion Revenue Strategic Manpower Startup Support External Contracts (VA & Dialysis Centers) College of Medicine Funds Flow Pot

SOURCES OF DEPARTMENT REVENUE - IN FUNDS FLOW Clinical Education Research Leader Support Other Professional Fees State Tuition & Fees Allocation Grant Funding & IDC’s Endowment Income Technical Fees (cardiac nuclear scans) UME Teaching Fees Chair or Divisional Startup Packages Other Philanthropy Medical Directorships Supplemental Medicaid Service Contracts Infusion Revenue Strategic Manpower Startup Support External Contracts (VA & Dialysis Centers) College of Medicine Funds Flow Pot

College of Medicine Funds Flow Pot SOURCES OF DEPARTMENT REVENUE - IN FUNDS FLOW Clinical Education Research Leader Support Other Professional Fees State Tuition & Fees Allocation Grant Funding & IDC’s $$$ Endowment Income Technical Fees (cardiac nuclear scans) UME Teaching Fees Chair or Divisional Startup Packages Other Philanthropy Medical Directorships Supplemental Medicaid Service Contracts Infusion Revenue Strategic Manpower Startup Support External Contracts (VA & Dialysis Centers) College of Medicine Funds Flow Pot

Dimensions & Missions of Funds Flow Summary of Changes MUSC will transition to a funding model that provides direct funding across missions to clinical departments based on algorithms tied to clear performance expectations. Dimensions & Missions of Funds Flow CLINICAL Departments funded based on a $/wRVU methodology tied to organization-wide productivity targets and aligned compensation Clear definition of cFTE based only on funded buydowns Performance targets for APP’s (1080 wRVU’s/ 1.0 APP FTE) Medical Directorships with defined expectations funded as a % of actual salary cost (minimum of .10 FTE effort) Hospital-based specialties funded via consistent coverage model agreements 20% of clinical salary at risk, with quarterly payments for goal achievement Department incentive to beat productivity targets and manage expenses

Dimensions & Missions of Funds Flow Summary of Changes MUSC will transition to a funding model that provides direct funding across missions to clinical departments based on algorithms tied to clear performance expectations. Dimensions & Missions of Funds Flow CLINICAL Departments funded based on a $/wRVU methodology tied to organization-wide productivity targets and aligned compensation Clear definition of cFTE based only on funded buydowns Performance targets for APP’s (1080 wRVU’s/ 1.0 APP FTE) Medical Directorships with defined expectations funded as a % of actual salary cost (minimum of .10 FTE effort) Hospital-based specialties funded via consistent coverage model agreements 20% of clinical salary at risk, with quarterly payments for goal achievement Department incentive to beat productivity targets and manage expenses Academic Administration Funding for department chairs and other leadership roles scaled to size of department

Dimensions & Missions of Funds Flow Summary of Changes MUSC will transition to a funding model that provides direct funding across missions to clinical departments based on algorithms tied to clear performance expectations. Dimensions & Missions of Funds Flow CLINICAL Departments funded based on a $/wRVU methodology tied to organization-wide productivity targets and aligned compensation Clear definition of cFTE based only on funded buydowns Performance targets for APP’s (1080 wRVU’s/ 1.0 APP FTE) Medical Directorships with defined expectations funded as a % of actual salary cost (minimum of .10 FTE effort) Hospital-based specialties funded via consistent coverage model agreements 20% of clinical salary at risk, with quarterly payments for goal achievement Department incentive to beat productivity targets and manage expenses Teaching Continued funding of MUSC Health-approved resident/fellow salaries over the cap Funding for GME program administration consistent with ACGME guidelines Additional program support for non-labor costs of running GME programs Academic Administration Funding for department chairs and other leadership roles scaled to size of department

Dimensions & Missions of Funds Flow Summary of Changes MUSC will transition to a funding model that provides direct funding across missions to clinical departments based on algorithms tied to clear performance expectations. Dimensions & Missions of Funds Flow CLINICAL Departments funded based on a $/wRVU methodology tied to organization-wide productivity targets and aligned compensation Clear definition of cFTE based only on funded buydowns Performance targets for APP’s (1080 wRVU’s/ 1.0 APP FTE) Medical Directorships with defined expectations funded as a % of actual salary cost (minimum of .10 FTE effort) Hospital-based specialties funded via consistent coverage model agreements 20% of clinical salary at risk, with quarterly payments for goal achievement Department incentive to beat productivity targets and manage expenses Teaching Continued funding of MUSC Health-approved resident/fellow salaries over the cap Funding for GME program administration consistent with ACGME guidelines Additional program support for non-labor costs of running GME programs Academic/Research (Academic Enrichment Fund) Institutional funding for faculty research effort pegged to salary coverage targets Funding for research support staff pegged to salary coverage and staffing ratios Funding to cover non-faculty research program expenses Funding to cover “over the cap” salary expenses Academic Administration Funding for department chairs and other leadership roles scaled to size of department

Global Principles of Department Funding Function Amount Funded by Funds Flow Mission Clinical Support The Clinical Support Payment [$/wRVU] allocates clinical revenues to Clinical Departments based on the volume of clinical activity performed Clinical

Global Principles of Department Funding Function Amount Funded by Funds Flow Mission Clinical Support The Clinical Support Payment [$/wRVU] allocates clinical revenues to Clinical Departments based on the volume of clinical activity performed Funding is agnostic to actual collections or payor mix Clinical

Funding Productivity Departments The Clinical Support Payment [$/wRVU] allocates clinical revenues to Productivity Departments based on the volume of clinical activity performed Each Department has its own $ per wRVU rate, which is calculated as follows: Department Net Clinical Expense Payment per wRVU Department wRVU Target Input Definition Net Clinical Expense Expected cost of clinical practice, less other clinical revenue sources [e.g. Chair support, Medical Directorships, etc.] Dept. wRVU Target Department clinical productivity expected by the Health System [measured by wRVUs] – Year 1 set at least at Median Department NET CLINICAL EXPENSE is the expected cost of the clinical practice after accounting for other clinical revenue sources Department CLINICAL cFTE is the amount of work force available to apply towards the clinical mission Department PRODUCTIVITY EXPECTATION is the expected clinical activity, measured by wRVUs The “Net Clinical Expense” is derived from the FY18 budget and is the clinical shortfall after accounting for all other clinical revenues (i.e. Medical Directors, Clinical Contracts, etc) wRVU Target is derived from the revenue budget and adjusted for productivity and compensation expectations

Global Principles of Department Funding Function Amount Funded by Funds Flow Mission Clinical Support The Clinical Support Payment [$/wRVU] allocates clinical revenues to Clinical Departments based on the volume of clinical activity performed Funding is agnostic to actual collections or payor mix Clinical Chair Support % of Chair salary; adjusted for # of faculty Overhead (all Missions) Funds Flow provides all clinical Departments with direct funding for the following functions:

Global Principles of Department Funding Function Amount Funded by Funds Flow Mission Clinical Support The Clinical Support Payment [$/wRVU] allocates clinical revenues to Clinical Departments based on the volume of clinical activity performed Funding is agnostic to actual collections or payor mix Clinical Chair Support % of Chair salary; adjusted for # of faculty 80% of Chair Salary funded, > 150 faculty Overhead (all Missions) Funds Flow provides all clinical Departments with direct funding for the following functions:

Global Principles of Department Funding Function Amount Funded by Funds Flow Mission Clinical Support The Clinical Support Payment [$/wRVU] allocates clinical revenues to Clinical Departments based on the volume of clinical activity performed Funding is agnostic to actual collections or payor mix Clinical Chair Support % of Chair salary; adjusted for # of faculty 80% of Chair Salary funded, > 150 faculty Overhead (all Missions) Academic Leadership Discretionary funds for faculty leadership time, equal to 1% of MD/PhD faculty salary expense To Fund Division Directors and Vice Chair Roles Funds Flow provides all clinical Departments with direct funding for the following functions:

Global Principles of Department Funding Function Amount Funded by Funds Flow Mission Clinical Support The Clinical Support Payment [$/wRVU] allocates clinical revenues to Clinical Departments based on the volume of clinical activity performed Funding is agnostic to actual collections or payor mix Clinical Chair Support % of Chair salary; adjusted for # of faculty 80% of Chair Salary funded, > 150 faculty Overhead (all Missions) Academic Leadership Discretionary funds for faculty leadership time, equal to 1% of MD/PhD faculty salary expense To Fund Division Directors and Vice Chair Roles This was not enough to keep everyone with the same level of protected time they previously had Hard to calculate in same year so used current year budgeted salaries Funds Flow provides all clinical Departments with direct funding for the following functions:

Global Principles of Department Funding Function Amount Funded by Funds Flow Mission Clinical Support The Clinical Support Payment [$/wRVU] allocates clinical revenues to Clinical Departments based on the volume of clinical activity performed Funding is agnostic to actual collections or payor mix Clinical Chair Support % of Chair salary; adjusted for # of faculty 80% of Chair Salary funded, > 150 faculty Overhead (all Missions) Academic Leadership Discretionary funds for faculty leadership time, equal to 1% of MD/PhD faculty salary expense To Fund Division Directors and Vice Chair Roles This was not enough to keep everyone with the same level of protected time they previously had Medical Directors % of actual salary based on effort (minimum 10% salary) Funds Flow provides all clinical Departments with direct funding for the following functions:

Global Principles of Department Funding Function Amount Funded by Funds Flow Mission Clinical Support The Clinical Support Payment [$/wRVU] allocates clinical revenues to Clinical Departments based on the volume of clinical activity performed Funding is agnostic to actual collections or payor mix Clinical Chair Support % of Chair salary; adjusted for # of faculty 80% of Chair Salary funded, > 150 faculty Overhead (all Missions) Academic Leadership Discretionary funds for faculty leadership time, equal to 1% of MD/PhD faculty salary expense To Fund Division Directors and Vice Chair Roles This was not enough to keep everyone with the same level of protected time they previously had Hard to calculate in same year so used current year budgeted salaries Medical Directors % of actual salary based on effort (minimum 10% salary) Was good and bad – lost a number of directorships, but others gained more funding Funds Flow provides all clinical Departments with direct funding for the following functions:

Global Principles of Department Funding Function Amount Funded by Funds Flow Mission Clinical Support The Clinical Support Payment [$/wRVU] allocates clinical revenues to Clinical Departments based on the volume of clinical activity performed Funding is agnostic to actual collections or payor mix Clinical Chair Support % of Chair salary; adjusted for # of faculty 80% of Chair Salary funded, > 150 faculty Overhead (all Missions) Academic Leadership Discretionary funds for faculty leadership time, equal to 1% of MD/PhD faculty salary expense To Fund Division Directors and Vice Chair Roles This was not enough to keep everyone with the same level of protected time they previously had Medical Directors % of actual salary based on effort (minimum 10% salary) Was good and bad – lost a number of directorships, but others gained more funding UME & GME Funding for Clerkship Director (.25 FTE) and Clerkship Coordinators (.50 FTE) continues as is $3,900 stipend per resident/fellow to support operating expenses Program directors & coordinators salary funded per RRC ACGME requirements Program Director = .10 FTE per 5 trainees Program Coordinator = 1.0 FTE per 30 trainees Education Funds Flow provides all clinical Departments with direct funding for the following functions:

Global Principles of Department Funding Function Amount Funded by Funds Flow Mission Clinical Support The Clinical Support Payment [$/wRVU] allocates clinical revenues to Clinical Departments based on the volume of clinical activity performed Funding is agnostic to actual collections or payor mix Clinical Chair Support % of Chair salary; adjusted for # of faculty 80% of Chair Salary funded, > 150 faculty Overhead (all Missions) Academic Leadership Discretionary funds for faculty leadership time, equal to 1% of MD/PhD faculty salary expense To Fund Division Directors and Vice Chair Roles This was not enough to keep everyone with the same level of protected time they previously had Medical Directors % of actual salary based on effort (minimum 10% salary) Was good and bad – lost a number of directorships, but others gained more funding UME & GME Funding for Clerkship Director (.25 FTE) and Clerkship Coordinators (.50 FTE) continues as is $3,900 stipend per resident/fellow to support operating expenses Program directors & coordinators salary funded per RRC ACGME requirements or Program Director = .10 FTE per 5 trainees Program Coordinator 1.0 FTE per 30 trainees ALL NEW MONEY $$$ Education Funds Flow provides all clinical Departments with direct funding for the following functions:

Global Principles of Department Funding Function Amount Funded by Funds Flow Mission Clinical Support The Clinical Support Payment [$/wRVU] allocates clinical revenues to Clinical Departments based on the volume of clinical activity performed Funding is agnostic to actual collections or payor mix Clinical Chair Support % of Chair salary; adjusted for # of faculty 80% of Chair Salary funded, > 150 faculty Overhead (all Missions) Academic Leadership Discretionary funds for faculty leadership time, equal to 1% of MD/PhD faculty salary expense To Fund Division Directors and Vice Chair Roles This was not enough to keep everyone with the same level of protected time they previously had Medical Directors % of actual salary based on effort (minimum 10% salary) Was good and bad – lost a number of directorships, but others gained more funding UME & GME Funding for Clerkship Director (.25 FTE) and Clerkship Coordinators (.50 FTE) continues as is $3,900 stipend per resident/fellow to support operating expenses Program directors & coordinators salary funded per RRC ACGME requirements Program Director = .10 FTE per 5 trainees Program Coordinator 1.0 FTE per 30 trainees ALL NEW MONEY $$$ Education Research & Education The Academic Enrichment Fund is the mechanism to allocate clinical revenues to COM departments based on the unfunded research and education activity in the department. In FY18, the goal is to provide funding to maintain a steady state of non-clinical activity in COM departments Funds Flow provides all clinical Departments with direct funding for the following functions:

Global Principles of Department Funding Function Amount Funded by Funds Flow Mission Clinical Support The Clinical Support Payment [$/wRVU] allocates clinical revenues to Clinical Departments based on the volume of clinical activity performed Funding is agnostic to actual collections or payor mix Clinical Chair Support % of Chair salary; adjusted for # of faculty 80% of Chair Salary funded, > 150 faculty Overhead (all Missions) Academic Leadership Discretionary funds for faculty leadership time, equal to 1% of MD/PhD faculty salary expense To Fund Division Directors and Vice Chair Roles This was not enough to keep everyone with the same level of protected time they previously had Medical Directors % of actual salary based on effort (minimum 10% salary) Was good and bad – lost a number of directorships, but others gained more funding UME & GME Funding for Clerkship Director (.25 FTE) and Clerkship Coordinators (.50 FTE) continues as is $3,900 stipend per resident/fellow to support operating expenses Program directors & coordinators salary funded per RRC ACGME requirements Program Director = .10 FTE per 5 trainees Program Coordinator 1.0 FTE per 30 trainees ALL NEW MONEY $$$ Education Research & Education The Academic Enrichment Fund is the mechanism to allocate clinical revenues to COM departments based on the unfunded research and education activity in the department. In FY18, the goal is to provide funding to maintain a steady state of non-clinical activity in COM departments Budgeted to take these missions to breakeven, haven’t received any funds yet Funds Flow provides all clinical Departments with direct funding for the following functions:

Lessons Learned & Mistakes to Avoid

Funds Flow Project Milestones FY15 FY16 FY17 FY18 Implement At Risk Salary for Clinical Faculty Engage consultants [Chartis] & Funds Flow Advisory Committee to make recommendations Design FY17 shadow year Funds Flow “Tool” Align COM budget process with FF principles Create FY18 Funds Flow “Tool” using Department budgets Redesign Department accounting structure to track mission-based work Review & finalize Department budgets, faculty compensation, and productivity goals Finalize Department wRVU targets and ensure alignment with faculty targets Develop analytics tool to distribute monthly payments to Departments Create Health System- & Department-level analytics reports Implement Shadow Year using financial tools

Funds Flow Project Milestones FY15 FY16 FY17 FY18 Implement At Risk Salary for Clinical Faculty Engage consultants [Chartis] & Funds Flow Advisory Committee to make recommendations Design FY17 shadow year Funds Flow “Tool” Align COM budget process with FF principles Create FY18 Funds Flow “Tool” using Department budgets Redesign Department accounting structure to track mission-based work Review & finalize Department budgets, faculty compensation, and productivity goals Finalize Department wRVU targets and ensure alignment with faculty targets Develop analytics tool to distribute monthly payments to Departments Create Health System- & Department-level analytics reports Implement Shadow Year using financial tools

Funds Flow Project Milestones FY15 FY16 FY17 FY18 Implement At Risk Salary for Clinical Faculty Engage consultants [Chartis] & Funds Flow Advisory Committee to make recommendations Design FY17 shadow year Funds Flow “Tool” Align COM budget process with FF principles Create FY18 Funds Flow “Tool” using Department budgets Redesign Department accounting structure to track mission-based work Review & finalize Department budgets, faculty compensation, and productivity goals Finalize Department wRVU targets and ensure alignment with faculty targets Develop analytics tool to distribute monthly payments to Departments Create Health System- & Department-level analytics reports Implement Shadow Year using financial tools Having an unrealistic timeline Have a true shadow year for all involved

Calculating Clinical FTE All clinical faculty without explicit external funding are assumed 100% clinical (1.0 cFTE) cFTE may be “bought down” for administrative, leadership, academic services, etc. Buy down funding calculation: Salary x % agreed upon work effort Resulting amount to be grossed-up to include fringe costs Example – based on funding: Faculty Total Comp. VA Med. Dir. Academic Admin GME Admin Research Dr. Ashley $175,000 – Dr. Berkeley $200,000 $20,000 $10,000 Dr. Cooper $100,000 $37,500 $2,500 Dr. Dorchester $150,000 $15,000 Total Buy Down cFTE – 1.00 $40,000 0.80 0.60 $15,000 0.90 THIS IS AN ANLAGOUS VERSION USING COMPENSATION AND DOLLAR AMOUNTS sample of buy down activities

Calculating Clinical FTE All clinical faculty without explicit external funding are assumed 100% clinical (1.0 cFTE) cFTE may be “bought down” for administrative, leadership, academic services, etc. Buy down funding calculation: Salary x % agreed upon work effort Resulting amount to be grossed-up to include fringe costs Example – based on funding: Not fully appreciating all the “fake buydown” of protected time for each faculty member Faculty Total Comp. VA Med. Dir. Academic Admin GME Admin Research Dr. Ashley $175,000 – Dr. Berkeley $200,000 $20,000 $10,000 Dr. Cooper $100,000 $37,500 $2,500 Dr. Dorchester $150,000 $15,000 Total Buy Down cFTE – 1.00 $40,000 0.80 0.60 $15,000 0.90 THIS IS AN ANLAGOUS VERSION USING COMPENSATION AND DOLLAR AMOUNTS sample of buy down activities

Understanding Compensation & Productivity Alignment There must be a variance between productivity %tile and compensation %tile because As an academic institution, we use a Rank-based pay There are significant clinical costs that contribute to clinical productivity outside of physician salaries The clinical mission subsidizes unfunded portions of the other missions For example, cost share for “over the cap” salaries of physician scientists As an institution, we agree that compensation and productivity should be aligned to appropriately reward performance and drive behavior. However, there is a lot of confusion around what ‘alignment’ really means: It is our goal to align median (50th%) compensation for midpoint (62.5%) productivity In a given year, we may need a wider variance to ensure affordability and the ability to reward high producers appropriately (per Chartis data)

Understanding Compensation & Productivity Alignment There must be a variance between productivity %tile and compensation %tile because As an academic institution, we use a Rank-based pay There are significant clinical costs that contribute to clinical productivity outside of physician salaries The clinical mission subsidizes unfunded portions of the other missions For example, cost share for “over the cap” salaries of physician scientists As an institution, we agree that compensation and productivity should be aligned to appropriately reward performance and drive behavior. However, there is a lot of confusion around what ‘alignment’ really means: It is our goal to align median (50th%) compensation for midpoint (62.5%) productivity In a given year, we may need a wider variance to ensure affordability and the ability to reward high producers appropriately (per Chartis data) FY17 was actually a 26 point spread FY18 – everyone was expected to perform exactly where they were in FY17 FY19 - requires a 30 point spread between Compensation and Productivity

Understanding Compensation & Productivity Alignment There must be a variance between productivity %tile and compensation %tile because As an academic institution, we use a Rank-based pay There are significant clinical costs that contribute to clinical productivity outside of physician salaries The clinical mission subsidizes unfunded portions of the other missions For example, cost share for “over the cap” salaries of physician scientists As an institution, we agree that compensation and productivity should be aligned to appropriately reward performance and drive behavior. However, there is a lot of confusion around what ‘alignment’ really means: It is our goal to align median (50th%) compensation for midpoint (62.5%) productivity In a given year, we may need a wider variance to ensure affordability and the ability to reward high producers appropriately (per Chartis data) FY17 was actually a 26 point spread FY18 – everyone was expected to perform exactly where they were in FY17 FY19 - requires a 30 point spread between Compensation and Productivity Start earlier and model all variables that impact each faculty member – don’t assume the consultants are right

Compensation/Productivity Analysis The department wRVU target is used to determine if a department’s compensation is aligned with productivity Outlier departments above the dotted line are targeted for a salary adjustment plan Outlier departments below the solid line are targeted for productivity improvement plans

Compensation/Productivity Analysis The department wRVU target is used to determine if a department’s compensation is aligned with productivity Outlier departments above the dotted line are targeted for a salary adjustment plan Outlier departments below the solid line are targeted for productivity improvement plans Data is powerful – use it

Existing Compensation Framework – XYZ Model The compensation framework below was implemented several years ago for clinical faculty (≥ 0.4 cFTE) in the College of Medicine. It has been inconsistently implemented across departments and did not address faculty with cFTE <0.4 or Research Faculty. Z = Bonus Paid at the discretion of the Chair Based on available funds At-Risk Performance Compensation Y = Based on achieving specific performance metrics related to: Clinical productivity Academics Citizenship Quality Compensation is at-risk Annual Base Salary Target Compensation X = Guaranteed and paid monthly Includes academic rank-based compensation Equal to approx. 80% of ‘target compensation’

ADJUSTED Compensation Framework To achieve better consistency across departments, the existing compensation framework was reviewed by the COM Compensation Oversight Committee. The following framework was approved for clinical faculty (≥ 0.1 cFTE) in the College of Medicine beginning in FY18. Z = Bonus At-Risk Performance Compensation Other Performance At-risk and paid quarterly Equal to at least 20% of ‘cFTE salary’; may be higher at Chair’s discretion Y = Clinical Productivity cFTE Salary Annual Base Salary Clinical Activity Guaranteed and paid monthly Guaranteed ‘clinical activity’ pay is equal to no more than 80% of ‘cFTE salary’ Target Compensation Modify X = 100% Guaranteed and paid monthly Examples VA salary, NIH grants, Leadership roles (Medical Dir, Program Dir, Div Chief, etc.) Funded Salary

Clinical Faculty At-Risk Compensation At risk compensation is further subdivided into two different parts: Equal to no more than 25% of at-risk [Y] Individual faculty goals will be set by the Department Chair May be paid quarterly or annually [at Chair’s discretion] as faculty member achieves goals Z = Bonus At-Risk Performance Compensation Other Performance Y = Clinical Productivity cFTE Salary Annual Base Salary Clinical Activity Target Compensation = $100,000 Equal to at least 75% of at-risk [Y] Payout may occur at a prorated amount based on the % of goal achieved; minimum threshold for payout = 80% of target wRVU goals are cumulative; at-risk pay missed in prior quarters can be paid in future quarters as goal is achieved X = Funded Salary

At Risk Salary & cFTE Calculations Prior to Funds Flow Total Salary $300,000 Medical Director (10%) $30,000 Grant Funding (5%) $15,000 Master Teacher UME (7%) $21,000 Department Provided Protected Time (10%) At Risk Salary (20% of Total Salary) $60,000 90% paid monthly automatically $54,000 10% paid quarterly based on goal achievement $6,000 cFTE calculation 100%-10%-5%-7%-10% = .68 cFTE

At Risk Salary & cFTE Calculations Under Funds Flow Total Salary $300,000 Medical Director (10%) $30,000 Grant Funding (5%) $15,000 Master Teacher UME $21,000 Funded Salary = X $66,000 Clinical Salary (Total – Funded) $234,000 At Risk Salary withheld and paid quarterly (20% of Clinical Salary) = Y $46,800 75% at Risk for wRVU Target $35,100 25% at Risk for Academic Goals $11,700 cFTE calculation $234,000/$300,000 = .78 cFTE

Department of Medicine Finance Management & Accountability Changes Needed Department of Medicine Revenues Expenses Surplus/Deficit

Department of Medicine Finance Management Changes Needed By Division By Mission Clinical Research Education Overhead Total Revenues Expenses Surplus/Deficit Department of Medicine Revenues Expenses Surplus/Deficit

Department of Medicine Finance Management Changes Needed By Division By Mission Clinical Research Education Overhead Total Revenues Expenses Surplus/Deficit Department of Medicine Revenues Expenses Surplus/Deficit By Division By Mission By Entity Clinical Research Education Overhead Total MUSC MUSCP Revenues Expenses Surplus/Deficit

Lessons Learned Having an unrealistic timeline Start earlier and model all variables that impact each faculty member – don’t assume the consultants are right Communicate, communicate, communicate Be sure your PR team is ready for negative press Complete a deep dive on all APP productivity. Create report to monitor all APP productivity. Have a true shadow year for all involved If you are going to get paid based on wRVU’s then you must have a comp plan in place that motivates wRVU production in advance Data is powerful – use it It is a massively complex change, virtually impossible to implement in 1 year Mistakes To Avoid Waiting too late to communicate the impact to each faculty member Waiting too late to implement the compensation plan changes Not having a clear method to fund core research-related expenses NIH Over the Cap & Cost Share Not fully appreciating all the “fake buydown” of protected time for each faculty member Not anticipating unintended consequences – like impact on FMLA Not sharing salary vs productivity gaps with faculty How to Survive Implementation Know your data better than anyone else Don’t wait for financial tools, reports and analysis to be created – develop your own Get involved and show impact, influence changes

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