Physician Compensation Design

At the heart of every hospital, health system, and physician practice are the physicians who provide care to patients. Your organization’s physician compensation plan is the primary relationship you have with your physicians, and having a well-crafted, market-based, contemporary compensation design goes a long way towards ensuring your physicians are motivated to engage in the behaviors that will set both themselves and the organization up for success.

At VMG Health, we use insights from market surveys and our work with clients in the healthcare industry to stay informed on how the top organizations are structuring their provider compensation plans. VMG Health then uses these insights to help our clients design compensation plans for their physicians that are guided by market best practices and aligned with where the organization is on the volume to value curve.

When VMG Health works with clients on a compensation design project, our team dedicates a significant amount of time to the research phase (Phase 1), learning everything we can about your organization’s compensation policies and procedures, benchmarking physician compensation and productivity levels to market, and reviewing risk and value-based payor contracts. We do this because there is no one-size-fits-all compensation program, and what works well for one organization may be disastrous for another.

For example, a primary care compensation plan that minimizes work relative value units (wRVUs) in favor of patient panel size and clinical quality outcomes can have a significant negative revenue impact to an organization whose payor contracts are predominantly fee for service.

The key to a successful physician compensation plan is to align physician incentives with the mission, vision, and values of the organization and the payor contracts that drive the revenue coming into the organization.

Once VMG Health has a strong understanding of the organizational dynamics, our team will lead your organization through the redesign phase (Phase 2) in which we discuss conceptual physician compensation plan designs, and conduct financial impact testing on the selected models to determine how the plan will impact your physicians and the organization’s bottom line.

Then, once a final compensation plan has been determined and your organization is ready to enter the rollout phase (Phase 3), VMG Health will assist with a communication plan, physician compensation reporting, compensation plan documentation, and anything else your organization might need to make the transition successful.

Physician Compensation Design Relevant Publications

Managing Physician Compensation Through a Pandemic 
2019 Physician Alignment: Tips & Trends