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Physician-Hospital Alignment |
Developing a Comprehensive Physician Compensation Program for a Large Physician Enterprise
Client Profile: Multi-site community hospital with over 150 employed physicians across many specialties
Project Type: Physician Compensation Design
Challenge: To assist the hospital in developing a compensation plan that rewards clinical productivity as well as administrative, service, and teaching (AS&T) effort and that accommodates a variety of physician practice settings (clinic vs. private practice type setting) and specialties.
DGA Solution and Results: DGA conducted interviews and discussions with representative stakeholders to understand the various compensation models in place, their limitations and desired improvements in future models. Pairing these findings with an extensive analysis of current compensation and productivity levels, DGA proposed a new compensation model, with a transition plan for all employed physicians.
This model compensates and protects AS&T effort based on time, level of experience, and seniority. Clinical compensation is based purely on productivity and payout ratios are based on national benchmarks as well as regional benchmarks from DGA’s proprietary regional survey.
The proposed model streamlines compensation across all departments, ensures fairness and increases transparency by virtue of its simplicity.
Transaction Support for Community Hospital Acquisition of Cardiology Practice
Client Profile: Community hospital
Project Type: Physician Compensation Design and Fair Market Value for Physician Compensation, Directors and PSAs
Challenge: Help the hospital resolve transaction issues in acquiring a cardiology practice as the result of the break up of a large regional cardiology practice.
The regional cardiology practice was shopping itself to various community hospitals, and the client was under pressure to act quickly since the practice was imploding.
DGA Solution and Results: DGA worked with our hospital client to:
- Design an incentive compensation plan that was competitive with alternative offers yet provided both productivity and quality incentives
- Render a fair market value opinion on the proposed compensation package
- Render a fair market value opinion on the value of the fixed assets
Our support created trust and credibility among the hospital management team, physicians and multiple attorneys, allowing the transaction to close successfully.
Exploring Succession Options and Valuing A Component of a Multispecialty Practice
Client Profile: Mid-Atlantic community hospital
Project Type: Business Planning and Healthcare Business and Medical Practice Valuation
Challenge: To assess the options to assure continuity of hematology/oncology services in the hospital’s local market, as one of the hematology/oncology partners in a large independent group approaches retirement. The practice refers most chemotherapy patients to the hospital.
DGA Solution and Results: DGA identified three options for the oncology practice, ranging from hiring new oncologists for the group, to having the hospital take over the hematology/oncology practice, to creating a hospital-group joint venture for hematology/oncology services.
Based on DGA analysis and on discussions with group representatives, the hospital and the group decided to further assess the hospital’s purchase of the hematology/oncology portion of the group.
DGA completed a valuation of this portion of the group, an unusual valuation situation. Since we were valuing a component of a larger practice, we had to consider complicated allocations of expenses and provide an opinion as to the fair market value of the hematology/oncology practice.
The hospital subsequently acquired the hematology/oncology practice and hired a replacement physician. Through this transaction, the hospital was able to successfully maintain the hematology/oncology chemotherapy business and the practice from eroding as a busy practitioner retires.
Designing Compensation to Attract New Physicians
Client Profile: Suburban community hospital
Project Type: Physician Compensation Design
Challenge: To develop a compensation program that would help attract new recruits to this very competitive market, while at the same time providing sufficient incentives to a mix of start-up practices, acquisitions, and currently-employed physicians. The hospital employed approximately 15 physicians who were compensated based on a guaranteed fixed salary with no incentive. There were plans to aggressively grow the physician network by recruiting physicians into the area, as well as potentially purchasing existing practices.
DGA Solution and Results: DGA successfully designed a model with productivity and expense management components as well as quality measures. The model had sufficient protections for newer physicians. Incentives were designed to align the interests of the physicians and the hospital and promote behavior the hospital wanted. The unique feature of this model was its phased approach in which different elements of the model would come “on-line” based on the tenure of the physician within the organization as well as the maturity of the practice. The final model maintained compensation at levels acceptable to existing physicians, and offered incentives at the point where physicians felt the ultimate compensation would be competitive and fair.
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