The Four Components of Effective Physician Compensation Packages
When it comes to employee compensation, we typically think in terms of salary and qualified retirement plans. These two components represent the guaranteed elements of an employee’s compensation package. They are essential and, more often than not, they are adequate for the majority of employees. But physicians have unique financial needs, including creative retirement planning solutions and avenues for tax-sheltering. They also have student loan debts that are far greater than average.
Increasing the Value of Physician Compensation
While it’s common to see physician compensation packages that include RVUs, signing bonuses, and/or a form of income guarantee, these compensation elements do not address physicians’ unique needs. When hospitals find a way to do so, they are able to distinguish themselves in the marketplace. A more dynamic physician compensation package can offer increased value, which ultimately aids in recruitment and retention, and can increase physician satisfaction and engagement.
The Four Components
When building physician employee compensation packages, we believe administrators should consider using the following four components:
- Guaranteed, short-term rewards
- Guaranteed, long-term rewards
- At risk, short-term rewards
- At risk, long-term rewards
A Customizable Solution
One of the best things about this compensation model is that it’s highly customizable. We tailor our Physician Employment Strategies to meet the individual needs of our clients. The at-risk portion of a physician’s compensation package can be linked to a facility’s organizational goals. If retention is a top issue, more emphasis can be placed on at risk, long-term rewards. If a hospital is looking to improve productivity, it can use its at-risk, short-term rewards to incentivize improvements in productivity.
Measure What Matters
In order to link compensation to organizational goals, you need to be able to measure the criteria that matters most to your organization. Through our strategic partner network, our clients have access to data analytic tools that help them measure things like productivity, patient satisfaction, and quality, making it easier for them to use compensation as a tool for growth.
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