An equitable way to pay physicians? Structured salaries only, Mayo suggests

Mayo Clinic's review of 2,845 physicians' pay suggests a structured, salary-only compensation model, which the system has used for more than 40 years, effectively eliminates pay disparities. 

The Rochester, Minn.-based health system turned to a structured compensation program for physicians to remove financial incentives to deliver unnecessary or less-than-desired care, according to a Mayo Clinic News Network report published by Morning Call. The model contains no incentives or opportunities for bonus pay, and nonsalary compensation and benefits are consistent across the system's locations and specialties. 

Cleveland Clinic and Kaiser Permanente also pay physicians salaries without incentives for volume of services performed. Their models stand in contrast to fee-for-service payments and arrangements, which can offer incentives for physicians to order more services than are best for patients.

To assess compliance with its own compensation model and whether it effectively rules out pay gaps, Mayo Clinic reviewed data — pay, demographics, specialty, full-time equivalent status, benchmark pay, leadership roles and other factors — for all permanent staff physicians employed by Mayo Clinic in Arizona, Florida and Minnesota who held clinical roles as of January 2017.

The system affirmed pay equity for 96 percent of the 2,845 physicians it reviewed. For those physicians whose salaries fell outside the predicted range, further evaluation found they actually had the appropriate compensation — most often due to unique or blended departmental appointments. Of the 115 physicians with higher- or lower-than-predicted compensation, there was no correlation with gender, race or ethnicity.

Mayo stands behind the findings as a call for healthcare organizations to systematically define the drivers and incentives of physician compensation, assess whether they unfairly exclude or disadvantage certain groups, then develop more equitable processes. 

"Our analysis is unique and to our knowledge the first to demonstrate that a structured compensation model achieved equitable physician compensation by gender, race and ethnicity, while also meeting the practice, education and research goals of a large academic medical center such as Mayo Clinic," says Sharonne Hayes, MD, a Mayo Clinic cardiologist and the study's first author. "The analysis of this long-standing salary-only model was reassuring, not only that it was equitable, but that we as an organization adhere to our own standards."

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