Case Preparation Summary - Performance Pay for MGOA Physicians
Who: Dr. Harry Rubash (chief of orthopaedics); Dr. James Herndon (chairman of Partners Orthopaedics); 12 MGOA surgeons; MGOA billing center employees
What: Dr. Rubash needs to lead the process of improving the financial position and sustainability of MGOA by properly incentivizing the MGOA employees.
Why: MGOA has been running annual deficits of several hundred thousand dollars a year for a long time. The endowment fund has been depleted. MGOA has had to borrow from the hospital in recent years to sustain operations. A few surgeons still incur negative financial surplus.
When: By the end of ...view middle of the document...
Surgeons do not have complete control over the costs associated with their particular surgery of expertise. | Incentivizing surgeons on their financial contribution to MGOA is less impactful. A technologically advanced surgery type might be extremely important to MGOA, but be one in which costs are high and margins low. A surgeon will become demotivated if unfairly punished for such a circumstance. |
Each surgeon performs a majority of their surgeries in their area of expertise, on a different type of patient group with different payment methods (generally speaking). | A hip replacement surgeon is much more likely to serve an elderly patient using Medicare than a spinal or knee surgeon. Surgeons have little influence on the payer types they predominantly serve. The pay rate of different payer types varies significantly, potentially impacting a surgeons performance pay through little fault of their own. |
Under the new performance pay plan, surgeons have little to no influence on billing efforts. | Incentivizing surgeons based on surplus is unfair and less motivating – they cannot influence how billing is completed. Surgeons with little increase in their surgery numbers could benefit from increased surplus derived from improved billing efforts. (Surgeon 10) |
Surgeons under the new performance pay plan are being incentivized to focus on their clinical work. | It is fair to assume that the levels of research work and teaching will suffer. This may impact the overall reputation and image of MGOA as well as the culture among hospital employees. |
General office costs are being split evenly among all surgeons. | Surgeons may become frustrated at realizing that they are being allocated the same office costs for their 27 surgeries (Physician 10) as a surgeon with over 500 surgeries (Physician 3). |
Constraints and Opportunities:
* Constraint: Surgeons have responsibilities with clinical work, teaching, and research. The motivations associated with each can be somewhat contradictory. (A surgeon who spends heavy time doing research is helping the reputation of MGOA, but making less money for MGOA).
* Constraint: The endowment has been depleted. The hospital recently forgave a million dollar debt. There is little room for any single additional year of losses.
* Constraint: In order to maintain the reputation of MGOA, research must continue to be done. However, this contributes little to the organizations’ current financial sustainability.
* Constraint: Surgeons cannot participate in how billing is done.
* Constraint: There is the possibility that MGOA must accept all payer types (including those with lower collection rates) due to government funding or regulations.
* Opportunity: There are two specialized groups – surgeons and billing. The surgeons can focus primarily on their time efficiency, increasing the number of surgeries performed. The billing group can focus on improving the pay rates across...