Career Planning
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Reviewing Your Job Offer
Review Physician Comp Models
As you progress in your job search, it is important to understand the different physician compensation models available, especially as you start the interview process and begin to receive job offers.
There is tremendous variability between comp models between specialties and even within the same specialty.
Most evolve over time and reflect local, regional, and hospital-specific financial pressures.
As you progress in your job search, it is important to understand the different physician compensation models available, especially as you start the interview process and begin to receive job offers.
There is tremendous variability between comp models between specialties and even within the same specialty. Most evolve over time and reflect local, regional, and hospital-specific financial pressures.
Nonetheless, a basic understanding of a few of the more common physician compensation structures will help you to assess your total cash compensation and earning potential for any offers you receive.
Physician Compensation Models
It will help to understand five basic compensation models.
With the salary compensation model, the physician is offered an employed position for a predefined, fixed salary. Annual salary is divided across a set number of pay periods, usually monthly or bi-weekly, over the course of the year.
Salary amounts should be based on fair market value and should have undergone a detailed, thorough analysis with recurring assessments to ensure a competitive compensation package is offered.
Physicians are paid based on their productivity level, which is usually measured by the work relative value units (RVUs) assigned to certain services or procedures rendered to patients.
Since these services and procedures create earnings for the practice, the physician is essentially paid a percentage of potential (billings) or actual (collections) revenue generated.
Physicians within the group are paid after practice expenses are deducted from revenue generated. This is a very simple model whereby revenue comes in, expenses are paid, and remaining funds are divided among the physicians as income.
In this model, financial incentives are designed to promote and reward certain behaviors and compensation is earned based on a specific, targeted performance level.
Incentive bonuses can make up any percentage of the total cash compensation, be measured on individual or team-based performance, and can include one or several performance measures. Common measures include productivity, quality, value, patient satisfaction, or outcome metrics such as reduced length of stay, decreased readmissions, etc.
Physicians are paid a fixed, pre-negotiated amount of money for each member enrolled in a health maintenance organization (HMO) plan and for a specific unit of time, typically monthly.
This model is driven by negotiated contracts between the provider, or practice, and HMOs. Monthly payments are received from the insurance company and the physician agrees to provide services to enrolled members of the HMO.
Also referred to as a “per member per month” payment (PMPM), the physician is paid this capitated amount every month for the duration of the negotiated contract with the HMO regardless of the patient volume.
Common Hybrid Structures in Physician Compensation
You will likely encounter a hybrid structure encompassing different aspects of one or more of the five models noted above, some examples of which are listed below.
Physicians are offered a pre-defined, fixed income as a base salary.
Plus Productivity Incentive
Physicians can earn additional compensation based on their productivity level. Productivity is typically measured by wRVUs with the incentive bonus as a percent of total billing or net collections. In neonatology, productivity can be difficult to measure since patient care is often shared across multiple partners, making attribution of specific care nearly impossible. It is common to pool RVUs generated by a practice to be split based on certain metrics, such as shifts worked, years in practice, etc. Other programs may use RVUs only as benchmarks for total group productivity, and instead use an hours- or point-based system to provide additional compensation above a base amount of workload and salary.
Plus Quality Incentive
Physicians can earn additional income depending on quality level. Performance measures can be based on clinical quality, patient safety, patient satisfaction, and can include process or outcome metrics.
Plus Productivity and Quality Incentive
Physicians can earn additional income depending on productivity and quality levels. In this hybrid structure, compensation is based on two incentive performance components.
Plus Productivity and Capitation
Physicians can earn additional income depending on productivity level and physicians are also paid a capitated, per month per member amount from HMOs as part of a negotiated contract. In this structure, an incentive will be offered based on productivity and an additional monthly stipend will be paid from the HMO to care and treat enrolled members of the health plan.
Physicians are paid based on their productivity level, usually measured by wRVUs.
Plus Capitation
In addition to their income based on their productivity, physicians are also a paid a capitated, per month per member amount from HMOs as part of a negotiated contract.
In this hybrid structure, most of the physician compensation will be based on productivity and an additional stipend will be paid by the HMO to care and treat enrolled members of the health plan.
With Income Guarantee
Physicians are offered a fixed income amount for one to two years until their own practice is fully established. This is essentially an income subsidy paid typically on a monthly basis. The actual revenue generated by the physician is deducted from the income guarantee, so that over time, the physician is producing his or her own income. This is a relatively uncommon comp model in neonatology.
Income guarantees are typically offered for a period of 12 to 24 months and will require the physician to remain in the community for a certain period of time after the guarantee period.
This is referred to as the forgiveness period, and typically ranges from 1-3 years after the income guarantee period is over.
Physicians are paid equally after practice expenses are deducted from revenue generated.
Equal Shares
Physicians are paid equally after practice expenses are deducted from revenue generated. This is a very simple model whereby revenue comes in, expenses are paid, and remaining funds are divided among the physicians equally.
Equal Shares after an Eligibility Period
There may be a work or practice commitment required before a new physician is offered the equal income distribution offered to the established providers in the practice.
Equal Shares with Productivity
There may be a portion of income that is distributed equally across all physicians within the practice plus a portion of income distributed to physicians based on productivity. In this model, there is a split between the two types of compensation.
Equal income distribution rewards the team-based efforts of the practice and the productivity-based compensation will reward individual contributions.
