Healthy Value Propositions to Attract and Retain Physicians

Written by on February 2, 2012 in Features - No comments
Young Doctor

By James E. Moniz, MSFS, President of Northeast VisionLink

Physician shortages are being experienced throughout the country as a result of various economic, geographic and demographic conditions, and are predicted to get worse. In order to attract and retain quality doctors, medical practices must employ specific recruitment and retention strategies that speak to physicians as individuals and to the organization as a whole. A framework for building and communicating a balanced approach to compensation must give proper weight to short and long-term incentives as well as fixed and variable pay.

Competitive salaries with bonuses are fundamental in attracting exemplary physicians and surgeons; however, health care environments that foster loyalty and achievement often do so through long-term incentive programs that create a “value proposition.” These programs trump high salaries and bonuses by providing the ability to grow wealth and impact future compensation. For example, phantom stock is an equity incentive that can be tied exclusively to performance. Phantom stock plans are not tax-qualified and therefore not subject to the same tax rules as 401(k) plans and can act as “golden handcuffs,” making a key member of a practice think twice about moving on to another opportunity.

Deferral plans are gaining popularity since they allow for pre-tax contributions that mirror 401(k) contributions lost under limitation rules. A deferral plan is a bonus that gives throughout the year as it allows physicians to reduce their current income tax liability and watch funds grow tax-deferred. In addition, a medical practice can match contributions to cover those not allowed under a 401(k) plan, making the deferral plan an incentive for longevity.

The foundation of a good incentive plan will include elements of vision, communication and motivation. A sound incentive program projects the potential that can be realized if incentive promises are fulfilled – by both the medical practice and the individual physician. The absence of well-defined indicators and framework of long-term benefits can cause even the most comprehensive program to fall short. Indicators – essentially the measures and metrics in a company’s reward strategy – are pivotal to a comprehensive incentive program.

It can be difficult to determine the extent to incentivize physicians, as the number of patients seen and revenue generated can vary widely. A general practitioner may see a high number of patients at relatively low incoming revenue per patient, compared with a surgeon who generates larger revenue with just a couple of procedures. Any incentive program must be built for the long-term so that a higher probability for retention exists.

The role of indicators is to improve performance, influence behavior and create focus. These elements can only be accomplished through communication and consistent reinforcement that promotes a mindset of employee ownership. Without a base of thoroughly defined indicators, motivation can collapse, creating a domino effect that can negatively impact an organization’s structure and culture in short time.

Compensation strategies must meet the requisite of the medical group and appeal to the individual goals of key physicians. If a doctor has a clear vision of how his/her performance impacts group performance, a vested interest in the organization’s success is developed, creating a sense of ownership for the physician and will ultimately lead the medical group toward revenue growth.

James E. Moniz
is President of Northeast VisionLink, a strategic compensation development and management firm that provides solutions to challenges facing growth-oriented medical practices and businesses in the 21st century.  Northeast VisionLink enables medical practices to achieve greater execution from key talent through compensation strategies.  Northeast VisionLink maintains offices at 50 Braintree Hill Office Park, Suite 109, Braintree, MA 02184. 781-356-2969.

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