What should compensation plans incentivize?

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I started off this gloomy Chicago morning with a session on compensation plans for academic and private practices, led by Drs. Ron Arenson, Pablo Ros and Vincent Mathews. Hailing from both environments, the speakers examined the relative merits of compensation based on productivity and other factors, and shared information on how plans tend to be handled today.

Hailing from the academic side, Dr. Ros observed that radiologist compensation tends to be based on some kind of inflation-adjusted standard salary, likely increasing according to academic rank, plus bonuses for productivity, academic contributions, and departmental citizenship. For those looking to structure compensation plans, he cautioned that buy-in from the group is critical, and that whatever you choose to incentivize, you will get - a version of "be careful what you wish for" for sure.

For instance, he said, it's hard to conceive of a group that doesn't link some component of pay to productivity. But this practice, in the short term, can lead to cherry picking, a lack of teamwork and possibly a degradation in quality. In the long run, as was discussed in yesterday's session on threats to the profession, it can undermine the growth of the group and the value of the field in general.

Dr. Mathews shared some interesting statistics on private practices garnered from both RBMA data and EDI attendee survey information. It is very uncommon for private practices to incentivize anything other than productivity, he said, although that may change as more practices become hospital-employed, as hospitals are likely to base compensation on factors like meeting quality and outcomes metrics.

It's difficult to imagine a practice succeeding without provisioning in some way for the fact that some radiologists are simply more productive than others, and without encouraging all members of the group to be as productive as possible. On the other hand, I do find it surprising that more private practices don't incentivize their members to engage in practice building activities such as enhancing quality and service. Last night at dinner a radiologist mentioned to me that his practice has seen some members request part-time partnerships, in which they do not work full time and receive only a percentage of partnership benefits. He was quite astonished at this development, and part-time partner does feel like a bit of an oxymoron. But if members of a private practice aren't rewarded for partnership activities the same way they are for reading a high volume of cases, it's not difficult to see why their priorities would skew away from partnership. As any economist will gleefully point out, financial incentives work like nothing else.

What do you think? Would it ultimately be counterproductive for private practices to follow the lead of their academic counterparts and link some portion of compensation to non-reading activities? Before you answer, bear in mind one final stat shared by Dr. Mathews: radiologists in the private practice outpatient clinic setting have the highest mean compensation in the US, while those in academic practice have the lowest. The differential is hardly chump change: around $200,000.