Beware encouraging unwanted physician behavior

If the concept of income division itself is flawed, one aspect is most troubling: A group’s formula may adversely influence physician behavior. Traditionally, groups sliced up the income pie based either on productivity (dollars collected), equal sharing, or on some combination of the two.

However, disastrous behavior, from the perspective of group welfare, can result from less-than-clear-headed adoption of any such formula. Groups with 100% productivity formulas may evolve to competing more among themselves than with their real competition—other neighboring practices.

But handing out equal shares of the income pie—ignoring incentive—is not necessarily any better. Rather than see the last patient, doctors may sneak off, leaving their partners to bear the burden, because their personal income will not be affected by poor performance.

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About Reed Tinsley, CPA

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Reed Tinsley, CPA