This is an excerpt from a member-only article. To read the article in its entirety, please login or subscribe.

Like many hospitals that owned physician practices or employed physicians in the mid-1990s, LexMedical, Inc., the physician practice arm of Lexington (NC) Memorial Hospital started out paying physicians fixed salaries-and got burned. After several years under the salary-based compensation model, operating performance dwindled to unacceptable levels, and physicians were underperforming on productivity measures compared to their peers in North Carolina and the rest of the country, says Anthony G. Mina, MBA, CMPE, executive director for LexMedical, Inc.