FACULTY COMPENSATION IN AN ACADEMIC RADIOLOGY DEPARTMENT: A CASE STUDY Margaret Birrenkott, MBA University of Wisconsin Medical School Madison, Wisconsin

RESULTS OF COMPENSATION SURVEY 28 respondents 75% have formalized comp plans 57% use RVUs as a component of the comp plan; 43% have no formal clinical productivity measures. 43% measure academic productivity as a basis for distributing incentive; 57% have no formal academic productivity measures. 25% allocate comp based on chair discretion AAARRO Meeting, September 13, 2003

DEFINITION OF TERMS “INCENTIVE” = productivity-based measure of work for which radiologist is compensated. “BONUS” = Additional salary paid out to radiologists based on revenue in excess of expenses (including ‘regular’ comp) “COMPENSATION” = Salary paid out exclusive of fringe benefits but including retirement. AAARRO Meeting, September 13, 2003

COMPENSATION FUNDING SOURCES Clinical Revenues 87% Hospital (GME) 5% Medical School (MAMA) 6% Research Grants 2% AAARRO Meeting, September 13, 2003

UW RADIOLOGY COMPENSATION PLAN COMPONENTS: Clinical 10% pool for call pay (‘Call Merit’) 70% equally shared with some disparity for rank and years of service in dept (‘Clinical Base’) 10% based on total RVUs (‘Clinical Incentive’) AAARRO Meeting, September 13, 2003

UW RADIOLOGY COMPENSATION PLAN COMPONENTS: Academic University base salary allocated for research and teaching activities 10% from clinical revenues awarded based on a point system (academic RVUs) for academic activities (‘Academic Incentive’) AAARRO Meeting, September 13, 2003

HOW IS $$ ALLOCATED? CALL MERIT Distributed first before other pools allocated Provided only to IVR and community sections Allocation based on frequency and intensity of call AAARRO Meeting, September 13, 2003

HOW IS $$ ALLOCATED? CLINICAL BASE Largest pool distributed equally regardless of rank, track or productivity +$5,000 increase for every rank greater than Assistant Professor +$1,000 for every year of service at UW Radiology Example: Associate Professor w/10 yr UW exp: $150,000 + $5,000 + $10,000 = $165,000 AAARRO Meeting, September 13, 2003

HOW IS $$ ALLOCATED? CLINICAL INCENTIVE Take faculty RVUs for previous 12 months clinical work Dollars distributed via a 1:1 ratio (every RVU awarded = $$$) Plain film (including dx mammo) adjustment of 1.35 AAARRO Meeting, September 13, 2003

HOW IS $$ ALLOCATED? CLINICAL INCENTIVE EXAMPLE: $1,000,000 in pool/385,000 total dept clinical RVUs = $2.60 per RVU Radiologist generated 10,000 RVUs (including plain film adjustment) Clinical incentive = $2.60 x 10,000 = $26,000 AAARRO Meeting, September 13, 2003

HOW IS $$ ALLOCATED? ACADEMIC UW base salary from medical school allocation of funds for grantsmanship, teaching, academic administration Academic incentive allocated based on internal ‘RVUs’ Administrative work for dept, UW, hosp, UWMF Presentations/publications Funded grants/grant applications Teaching awards AAARRO Meeting, September 13, 2003

HOW IS $$ ALLOCATED? ACADEMIC INCENTIVE EXAMPLE MD completes Faculty Assessment Form to self report academic production FAFs reviewed and scored by dept committee Points totaled and MD placed in ‘tier’ 1-250 $9,500 251-500 $12,500 501-750 $15,500 Etc. Size of merit per tier determined by amount of $$ in pool Everyone participates Bring copy of FAF to show. AAARRO Meeting, September 13, 2003

HOW IS $$ ALLOCATED? TOTAL SALARY IS SUM OF: Call Merit (if appropriate) Clinical Base Subject to Clinical Incentive 5% withhold Academic Incentive Academic Base Bonus if revenues allow; distributed evenly Withhold returned at year-end if revenues allow AAARRO Meeting, September 13, 2003

MANAGEMENT OF PLAN Chair has small discretionary fund to ‘tweak’ salaries as needed Department Finance Committee meets regularly and reviews budgetary and staffing needs to ‘right-size’ sections Grieve through Dept Finance Committee; if unresolved, appeal to chair and ultimately to practice plan Comp Development Committee AAARRO Meeting, September 13, 2003

MANAGEMENT OF PLAN Educate, educate, educate! Town hall meetings prior to plan implementation Section meetings to explain changes Present simulations to show impact Presentation of plan components at faculty meetings Chair/administrator one-on-one meetings with faculty AAARRO Meeting, September 13, 2003

CHALLENGES AND LESSONS LEARNED Equalizing plain film RVUs vs. CT/MRI and IVR. Fairest method?? Switched to a 1:1 ratio vs. using internal dept target for ‘simpler’ clinical incentive. How should academic productivity be valued? Who determines academic RVUs? Reward intensity and frequency of call. Give sections flexibility to allow redistribution among section members. Determining what is fair was tough. Didn’t implement at onset of our comp plan, so CT/MR/Community/IVR felt like $$ was taken away. Same as #1. Used to use a dept benchmark so MDs who earned high RVUs felt they were incentivized but caused some in-fighting. When tried to equalize it to simplify plan, pool diluted and high earners felt $$ taken away. Needs to be an incentive for having to take more frequent and intense call when doing riskier procedures. Rest of faculty okay with it. Ante has gone up, though. Some feel administration should not be valued very high; some feel research valued too much. So, really depends on where their interests lie and what they each value. Hard to come up with a plan that pleases everyone. AAARRO Meeting, September 13, 2003