Don't change a thing about your physician compensation plans before taking these proactive steps.
Changing physician compensation plans is inherently difficult, but especially toilsome as reimbursement mechanisms continue to transition away from fee for service (FFS) and toward value-based care.
This evolution is manifesting more quickly in some U.S. markets, such as in the progressive Commonwealth of Massachusetts, where risk-based contracts are plentiful.
During a recent panel discussion hosted and live-streamed by the Massachusetts Medical Society's Physician Practice Resource Center, experts offered guidance to leaders looking to align their compensation plans with the way practices are getting paid.
1. Teach 'Value 101'
"Before you make radical changes, either operationally or as it relates to physician compensation, there needs to be broad education," said Eric Passon, founder and CEO of consultancy Ancore Health. In particular, employed physicians as well as their leaders need to understand the basics of how their organization makes and spends money under its current value paradigm.
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Physicians should also be provided with insights into where a group's contracting strategy is going.
"There are a lot of things in the FFS world that are not really good for a hospital," he said. "Understanding that economic transition between point A and point B is critical."
2. Know What You Owe
Even though compensation linked to meeting certain metrics is often called a "bonus," physicians count on receiving it.
"The more metric-driven a comp plan, the more the program becomes, in the eyes of the law, essentially a commission. And a commission is considered to be wages," noted Valerie Samuels, a partner with Posternak Blankstein & Lund LLP in Boston.
"So at the end of the month or quarter or whenever that bonus money is given, it's not going to be discretionary," she said. "It's definitely due and payable, and the penalty for not doing so [in Massachusetts] is triple damages plus attorneys' fees."
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To protect your practice in the event of a disagreement, Samuels urged practice leaders to have all compensation plans reviewed by counsel upfront. "Better to spend $1,000 making sure you're compliant than lose hundreds of thousands in litigation later," she said.
3. Do a Test Run
No matter how much due diligence goes into creating a compensation plan, unintended consequences occur frequently, noted Passon. But a trial or shadowing period before implementing a new plan fully can help iron out some kinks.
Importantly, this approach allows leadership to continue to build trust with physicians throughout the shadowing and implementation process, he said.
Investing the extra time in your physicians as a resource may pay off legally as well.
"Having done employment law for many years, I've observed that most lawsuits come from misunderstandings," Samuels said.
"When you're dealing with highly educated professionals, many of the problems come from miscommunication; lack of writing things down in a clear, coherent manner; or lack of buy-in."
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Debra Shute is the Senior Physicians Editor for HealthLeaders Media.