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.

About the Author

Reed Tinsley CPA

This article is written by Reed Tinsley, a Houston, TX-based CPA with over 30 years of experience advising physicians and medical practices across Texas and the United States. Reed holds certifications as a Certified Valuation Analyst (CVA), Certified Healthcare Business Consultant (CHBC), and Certified Financial Planner (CFP), specializing exclusively in the healthcare sector. He is a published author, nationally recognized speaker, and trusted advisor to physicians on accounting & tax, practice management, and financial planning. Schedule a Free Consultation.