George S. Conomikes


May 10, 2011


What is the number one reason why physicians leave their practice group?

Discontent over their compensation.

There are many ways to structure a compensation plan, and each has its pros and cons. A group may compensate its partners on the basis of productivity measured by relative value units generated, bonuses that are based on productivity and patient satisfaction, equal pay model in single-specialty groups, achievement quality and efficiency measures, or a number of other plans.

Unfortunately, many groups rush to create the compensation plan design before they bother to develop clear-cut strategies that would guide the building of the plan. They also neglect to reevaluate the plan on a periodic basis and to pay closer attention to critical signs of dissatisfaction with the plan. (In Medscape's 2011 Physician Compensation Report, about 53% of physicians said that they believed they were fairly compensated, but that varied by specialty. See the report at

Medical groups need the stability that comes from close attention to each group's requirements.

For example, the compensation plan was a real sticking point for one 27-physician orthopaedic surgery group. They had a long-standing income- and expense-sharing plan in which expenses were shared on the basis of revenues. The 3 spinal surgeons produced more revenue, and so their expense allocation was greater than that of their partners.

However, because those 3 surgeons saw fewer patients in the office than the other partners, they used the staff (the major expense item) much less than their colleagues did. In addition, because those 3 surgeons' fees were higher than any of their fellow orthopaedists, the billing staff devoted much less time to billing and collecting those revenues.

The 3 spine surgeons wanted to change the expense-sharing arrangements and were ready to quit the group if the changes weren't made. The other surgeons didn't want to make the change.

The outcome? We recommended a minor variation in the expense-sharing formula that resulted in modest decreases in the incomes of 24 partners but in measurable increases in the spine surgeons' take-home pay.

However, not every medical group manages to develop a plan that's acceptable to everyone.


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