Ask the expert: Should our hospital offer an incentive compensation plan to employed physicians?

Hospital employers and physician employees must first decide whether the base salary and benefits will constitute the total compensation that the employer offers. If the employer decides not to offer additional incentive compensation, it still should articulate and measure performance expectations. Some physicians may feel more comfortable with a simple compensation arrangement as opposed to a complex formula for determining the value of their additional performance, and hiring organizations do not have to fear the unintended consequences of incentivizing certain behaviors. However, by not offering incentive compensation, the employer may lose out on opportunities to engage employees in the pursuit of certain quality, financial, and growth goals. Each hospital needs to decide for itself whether incentive compensation is beneficial. Remember, you can always hire physicians with the expectation that they will be paid a base salary and benefits and then incorporate a bonus program later. However, don’t hire physicians with the expectation of receiving bonuses and then switch your plan to straight salary and benefits.
 

This week’s tip is adapted from The Greeley Guide to Physician Employment and Contracting by William K. Cors, MD, MMM, FACPE, CMSL and Richard A. Sheff, MD, CMSL, published by HCPro.