The best compensation model

Q: We are a large, single-specialty group interested in revising our compensation model. Can all-equal salary models work between partners?

A: Physician compensation always is the most difficult area for partners to agree on. There is neither a right answer nor a uniform formula or model that always will work. The best, time-tested compensation model guaranteed to work is the solo practitioner model: revenue minus expense equals physician compensation.

Compensation models are simple, numerical formulas that allocate revenues and expenses. The difficulty arises in implementing the plans to fit the group's culture, personality, practice style, mission, and business plan. The art in designing the compensation plan is accurately reflecting the behaviors the group wants to reward to achieve its business goals. The wrong plan can cause a group to stagnate and put disincentives in place to keep physicians from taking risks or taking care of certain patients. Groups that have a strong culture of sharing and measure key success indicators can maintain all-equal compensation models.

Answers to readers' questions were provided by Thomas J. Ferkovic, RPh, MS, managing director, and Daniel E. Clark, MBA, senior consultant, SS&G Healthcare Services LLC in Akron, Ohio. Send your practice management questions to medec@advanstar.com Also engage at http://www.twitter.com/MedEconomics and http://www.facebook.com/MedicalEconomics.