The Challenges of Fair Faculty Compensation Plans November 2015

“Life is not fair” »DB Welling

It’s Complicated Harvard Department of Otolaryngology –Beth Israel Deaconess –Boston Children’s Hospital –Brigham & Women’s Children –Massachusetts General Hospital –Massachusetts Eye and Ear Infirmary Downtown Academic Practices –MD, PhD, MD/PhD, etc Suburban Practices

Principles Transparency Fiscal responsibility Reward relevant activity

Practices New hires – Training, Experience, Research, Leadership, Market - MGMA, AAMC guidelines – Clinician/scientist 2-3 years salaried position Time allocation 50 – 75% research Ongoing faculty – Citizenship – Clinical productivity less expenses – Harvard Ceilings – Incentives

Harvard Ceilings Faculty Compensation Guidelines Academic Rank Maximums The HMS limits for the academic year beginning July 1, 2014 Academic Rank Academic Salary Maximum Total Direct Compensation Maximum Professor Associate Professor Assistant Professor Instructor $320,500 $246,600 $219,600 $184,600 $783,300 $602,800 $537,000 $451,300

Incentives Some funds distributed department wide based upon contracting to make whole all members of the faculty Some funds return to doc’s who’s net income exceeds the Harvard cap – 50% to the department – 50% to their research fund for academic use Substantial impetus for promotion – teaching, research, publication, clinical innovation, leadership, national and international reputation, funding, etc

Track Productivity Through Cost Center Reporting (Revenue and Expenses) Revenue Collections through clinical work Departmental/Institutional support Expenses Professional salaries and benefits Support staff salaries and costs Billing fees Other clinical expenses related to professional clinical activities Contributions to the Chief’s Fund

Cash Flow - Physician Cost Center OtolaryngologyOphthalmology Individual Bonuses Determined by Department Chair using 50% of Surplus as a Guiding Factor Net Receipts & Other Revenue Less: Physician Base Salary Less: Physician Benefits 7.5% of Net Receipts Less: Billing, Fiscal, Practice Admin Less: Other Operating Costs Less: Contribution to Chief’s Fund Net Practice Surplus Available for Incentive Compensation Incentives Less: Direct Support Costs $5,000 Per Physician Boston – 50% of Surplus Goes to Physician Suburban Centers –90% of Surplus Goes to Physician Remaining Surplus to Department Note: Total Compensation Including Salary from Outside Sources is Capped at the Harvard Maximums for all Academic Faculty.

Departmental taxation $5,000/year 50% of overage to department Overhead rate 28%-42%

Summary Strengths Productivity based Academic incentives –Harvard Cap –Overage used for academic activity Suburban centers bring cases to MEEI Hospital support Development support Great faculty! Challenges Declining dollars Departmental support Complex Competition Disparity throughout Research and teaching not well compensated “Life’s not fair”

Thanks Dave and SUO