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How to Determine Compensation for Medical Staff Leaders

Liz Jones, April 22, 2010

In the past, many physicians considered their medical staff leadership responsibilities a privilege. Therefore, they did not demand compensation. However, in recent years, it has become common practice for hospitals and medical staffs to compensate chiefs of staff and medical staff presidents, committee chairs, and department chairs for their leadership involvement. This trend is occurring for two reasons.

First, decreased reimbursement and higher overhead have strained physicians' wallets. Many are no longer willing to spend time on volunteer leadership responsibilities when they could be seeing patients and generating revenue.

The second reason is that the scope of medical staff leadership responsibilities has grown in recent years. "If you look at all the responsibilities The Joint Commission and other regulatory bodies place on department chairs, it is arguably a full-time job," says Michael Callahan, Esq., partner at Katten Muchin Rosenman in Chicago.

There is no magic formula to help hospitals determine which leaders to compensate and how much. However, there are some questions that medical staffs and hospital executives should ask themselves before putting their John Hancock on a check.

The first question is should medical staff leaders get paid? If physicians are willing to take on leadership responsibilities because they feel that it is their civic duty, the medical staff or hospital can choose not to compensate them. However, if a hospital has difficulty finding individuals to volunteer, it may need to open up the checkbook. If your organization decides to compensate leaders, it should clearly spell out which leaders receive compensation in an administrative policy.

Your organization may also be asking itself, "If we decide to compensate medical staff leaders, which leaders should get compensated?" According to Mary Hoppa, MD, MBA, senior consultant with The Greeley Company, a division of HCPro, Inc. in Marblehead, MA, hospitals most commonly pay medical staff presidents and chiefs of staff because they spend a significant amount of time way from their clinical practices to tend to their responsibilities.

When deciding how much to pay leaders, hospitals should ensure that the amount of money a physician leader receives is commensurate with his or her responsibilities and stays within fair market value, thus complying with federal regulations. If hospital administration pays a leader exorbitantly to attend one medical staff meeting per month, that may throw up a red flag for the Internal Revenue Service and the Office of Inspector General, which enforce the Stark Law and Anti-kickback statute.

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