Productivity-based compensation: why it’s such a challenge

May 7, 2010
Pat Kroken

At best, productivity-based compensation is a hot topic; at worst, it is potentially the downfall of those promoting it-if not threatening to the very survival of a group. Are there groups compensating on a productivity-based model? Yes, but very few.

At best, productivity-based compensation is a hot topic; at worst, it is potentially the downfall of those promoting it-if not threatening to the very survival of a group. Are there groups compensating on a productivity-based model? Yes, but very few.

As technology has improved productivity of radiologists overall, it has also contributed to the disparity between those at the top of the production scale and those at the bottom. In a typical group, there are usually several producers who seem to have a natural ability to crank through a high volume of procedures, including both complex cases and the bread-and-butter plain-film work. In many instances they also represent the leaders in the group and assume administrative duties as well, meeting with hospital administrators, negotiating contracts, and maintaining visibility with the medical staff and community. They clean up the list (or stack) without being reminded and are the folks with whom everyone wants to share a shift.

The top producers also more openly express their frustration at carrying the freight but still earning pay equivalent to the least productive, least involved member of the group. Under traditional compensation models, revenue in excess of that needed to cover base salaries and expenses is split evenly among all partners in the group.

While it is difficult to argue with their frustration, there appear to be several common characteristics at play:

 

  • The top producers, as evaluated by a combined measure of procedure volume and RVU production, are more apt to read more MRI and CT cases while still breezing through a high volume of plain films. They are racehorses who often take less time per case to make a decision, while demonstrating a disciplined work ethic. They may include subspecialists in neuroradiology or body imaging, both high-RVU areas.

  • The middle group is likely to include the general radiologist who may carry a heavier load of plain-film work or women’s imaging procedures and whose caseload includes a higher volume of cases with lower relative values assigned. This group is essential to the smooth functioning of a practice and enables others to subspecialize. They are the workhorses of the group and the racehorses usually recognize their value and want to ensure they are not unduly hurt in a productivity-based model.

  • The bottom few radiologists, in terms of production, are the source of ire for the racehorses and may also aggravate the workhorses. They often feel the pressure of judgment even when it is unspoken. This group may include new radiologists just out of residency and/or those formerly involved in a less intense atmosphere than a busy private practice. In some cases they are just slower with their interpretations and simply will not become faster as they gain experience. As long as they clean up their lists by the end of the day, the “plodders” will generally be tolerated by the racehorses. Unfortunately, this area also tends to include the problem child whose lack of organization or work ethic results in service complaints and who gets lumped in with other plodders who, fairly or unfairly, are characterized as not pulling their weight. In fact, when analyzed on a production basis, many physicians in this lowest tier may not cover their base salaries and benefits. Not only are they subsidized by the group in that regard, they share equally in the rewards generated by their peers. On the other hand, they do share in call and perform vacation coverage or there would be even greater productivity pressure placed on them.

Hence the potential for total disruption as the concept of productivity-based compensation hits the shareholder agenda. The racehorses are fully onboard, champing at the bit and tired, especially if they just shared a busy shift with a plodder.

The plodders know this is a grim scenario for them, especially if someone trots out the numbers. They typically respond by accusing the group of perversely focusing on money at the expense of quality and stir up the herd by reminding them they, too, could be victims of the bright light of scrutiny. They will be highly vocal, opposed to the entire concept and fighting to maintain financial status quo.

The plowhorses are threatened, especially if they do not have control over the types of cases or sites of service they are assigned. Philosophically they don’t object to productivity-based compensation, but they may not have a real opportunity to fully participate and they know they are covering a critical area for the group as a whole. They have trouble looking at a scenario where they work hard but may be financially penalized, so they are apt to be split in terms of throwing in with the racehorses or plodders.

Will the racehorses leave to seek a new herd? Will the plodders crack under the pressure? What happens to the traditional radiology practice model where everyone works together and shares good and bad times? This is the dilemma facing those groups feeling they would like to broach the topic of productivity-based compensation. What would it take to make it work?


First in a series. Next: Considerations that affect base compensationMs. Kroken is a consultant and principal in Healthcare Resource Providers. She can be reached by e-mail at pkroken@comcast.net.

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