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Do Compensation Plans Cause Burnout?

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Do Compensation Plans Cause Burnout?

Can physician compensation plans cause burnout?  Of course. Read on understand how and why.

Every medical group puts a lot of time and effort into crafting the physician comp plans that achieve a variety of goals:

  • Motivate physicians to contribute as much as possible to the good of the group, most commonly encouraging productivity which is key to most groups’ revenue, which is key to keeping the group solvent and paying the physicians competitive wages.
  • Encourage physicians to focus on metrics that are important to the group, as payers will pay bonuses for certain levels of patient satisfaction, achieving quality and safety metrics, or improving access.
  • Reward physicians for contributing to the greater good of the group as a whole, such as “citizenship” dollars for meeting attendance.
  • Adding compensation for specific roles, such as department chair or divisional medical director.Image result for money on the table

Most groups use a productivity-based compensation plan as the best way to motivate their physicians to go the extra mile, work in the extra patient that day, and ensure they are coding properly so as not to be “leaving money on the table.”

Other groups set a straight salary for everyone, relying on the group’s strong culture and effective physician leaders to ensure everyone is contributing fairly.

Some groups choose to take a hybrid approach – a base salary augmented by a combination of productivity, quality or satisfaction metrics, and citizenship.

How can Compensation Plans Cause Burnout?

Every approach to compensation has its benefits and downsides.  Let’s consider the impact of the different compensation plan options on the six drivers of burnout, remembering that burnout can manifest as emotional exhaustion, cynicism, and/or a sense of inefficacy.

The six drivers include:

  • Work Overload
  • Lack of Control
  • Inadequate Reward
  • Breakdown of Community
  • Absence of Fairness
  • Conflicting Values

The other issue for physicians is work-life imbalance, which is worse for physicians than most other professions.

Work Overload

A productivity-based comp plan is a risk. The most common approach in larger medical groups in to pay a dollar amount per work RVU ($/wRVU) that is adjusted by specialty.  This motivates physicians to produce more, and thus contribute more revenue to the group, which is positive. It can also drive work overload, as physicians may take on a workload that results in worsening work-life balance.  As physicians try to do too much, they can cut corners on documentation, quality and safety issues, and citizenship contributions.

Salary-based comp plans often include an expectation of baseline wRVU productivity or panel size.  some physicians are challenged by the workload to maintain those base expectations.

Lack of Control

A productivity based comp plan gives physicians control over how much they earn.  Salary based plans do not. Clinical autonomy is an important value for physicians. Some physicians are frustrated when performance-based bonuses are seen to infringe on their autonomy.

Inadequate Reward

Financial rewards may be an issue for physicians, especially those just out of training who have large educational debt.  There are factors affecting reward beyond the financial.  Physicians value their relationships with their patients, colleagues, and staff, as well as professional recognition.  In either the productivity or base salary scenarios, there is potential for the physician to feel that financial or non-financial rewards are inadequate.  Leadership, communication, and a values-based group culture are key to mitigating these issues.

Breakdown of Community

Productivity-based comp plans have a higher risk of negatively impacting the sense of community than a base salary plan does. This is particularly true if physicians decline to participate in group activities that do not generate wRVUs.  Performance bonuses (which are common in both productivity and base salary plans) can foster collaboration among a team if the bonus is based on team performance, or hurt collegiality if based on individual performance.

Absence of Fairness

Fairness can be a significant challenge.  At some point most multispecialty groups deal with the issue of different specialists getting paid different amounts. This is necessary for groups to attract high quality physicians in certain subspecialties.

Another challenge may arise in terms of physicians feeling that the opportunities to produce are not fairly shared. There may be differences in staffing, office space, or market demand by location. A common challenge arises when the group needs to new physicians into an office, yet the established physicians worry about their productivity being diluted.

In all of these cases, group leadership and a values-based culture are key to working through these valid concerns.

Conflicting Values

One of my good friends and leadership mentors, Dr. Tony Marzoni, had a great saying. “Every medical group has a culture committee. They simply call it the compensation committee.” I’ve been in plenty of heated compensation committee meetings and board meetings where tempers flared due to compensation disagreements.   When we realize the high stakes, personal nature, and burnout drivers that are impacted by compensation decisions, it’s not surprising.

A group’s culture is based on its values. Each group has a unique culture. That’s a good thing. The key is to ensure that the comp plan aligns with the values and culture. Ideally physicians choose to join a group that aligns with their values, and are rewarded appropriately because the comp plan reduces conflicts between the physicians’ and group’s values. This is why culture and values work is so important in medical groups.  The work that goes into defining a group’s culture and values develops the foundation upon which the group’s comp plan and other policies are built.  A solid foundation is key to a strong group.

Do Compensation Plans Cause Burnout?

What matters most?

  • Is it the plan design, productivity vs. salary based, that is key?
  • Is it the group’s leadership?
  • Or is it the group’s shared values and culture?

It’s likely a combination of the three, but there is a lot of room for respectful disagreement and discussion on this issue.

What do you think? Please share your thoughts by sharing a comment.