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Written by Reed Tinsley, CPA | September 23, 2011
Before considering any specific pay formula or plan, the initial stage of analysis for an organization should be a review of its compensation philosophy, and today many groups are undertaking a careful analysis of what they feel the goals and objectives of their compensation formula should be. Goals for consideration might include such diverse issues as:
- Aligning compensation with work effort
- Promoting a group culture
- Providing health care services to underinsured or uninsured
- Ensuring cost effective quality care
- Ensuring a methodology that will attract and retain quality physicians
- Improving service to referring physicians
- Permitting balanced lifestyle for those physicians who desire better balance
- Valuing business leadership and physician administrative services
- Promoting teaching, education and research
When considering design principles for the income distribution methodology,, groups are wise to seek formulas that are well defined and understood, and which leave little that is subject to interpretation and the resulting potential for mistrust. Further, the methodology should employ measures that are simple, within the physician’s control, and which present a clear relationship to the desired behavior or goal. These characteristics are desirable to both the physician and compensation professional. However, in today’s reimbursement environment – that is neither rational nor simple itself, it is unlikely that a formula can perfectly meet all of those characteristics as well as satisfy the wants and needs of the physicians.
