Compensation & Competency: 4 Factors to Consider When Hiring Physicians

Physicians' compensation and competency are two basic factors of hospital employment that have undergone slight changes in the past decade. There are a variety of payment models available for physicians today and the same skill sets that was once defined a "competent physician" 10 years ago may be slightly different than what hospitals are looking for today.

Here, James Otto, senior principal in the healthcare practice of Hay Group (a global management consulting firm based in Philadelphia), and Rod Fralicx, vice president in the healthcare practice of Hay Group, expand on four points — two financial and two interpersonal — for hospitals to consider when hiring physicians.

1. Compensation arrangements and incentives. Hospitals need to define how much they want to pay, how they will pay, and how they will compare their compensation structure to the market. In the 1990s, compensation packages were largely comprised of straight-based salaries for extended periods of time, such as five years. Now there is more variety in compensation arrangements. The models range from a straight-based salary, to a salary with a productivity component or combination of a salary and incentives.

Benefits also play a large role in physicians' compensation packages. "Think about and articulate the kind of benefits you'll provide physicians," says Mr. Otto, "especially retirement benefits." Robust benefits such as malpractice insurance, payment of professional dues and paid time off can really distinguish a hospital compensation plan from that of the physician's current practice.

2. Incentive strategies for different specialties. Hospitals can consider two sets of incentive measures for physicians. For instance, measures can be broken down to fit each physician specialty in addition to a comprehensive incentive plan that spans across all specialties. "What is the hospital trying to achieve with the pediatricians or primary care physicians compared to what they're trying to do with the cardiologists?" says Mr. Otto. By distinguishing different targets and goals for each department, hospitals can truly leverage incentives to drive improvements and keep physicians challenged.

3. Competencies and personal traits. With the cultural shifts taking place in the field of medicine, it's crucial that physicians have a sense of flexibility. "It goes beyond being productive. It's about being able to function on a team and in a collaborative environment," says Mr. Otto.

Though the modus operandi for physicians has traditionally been autonomous and somewhat hierarchical, healthcare now requires collaborative attitudes and team-based approaches to patient care. When hiring physicians, hospitals may spend more time gauging candidates' interpersonal communication skills and ability to thrive in these team-based settings.

More hospitals are also emphasizing emotional intelligence when hiring physicians, particularly since patient satisfaction scores will now be tied to reimbursement as part of value-based purchasing. "A lot of quality measures have to do with patient satisfaction, a subjective type of rating. To patients, how they are treated may have more to do with their outcomes than the treatment they received." Signs of high emotional intelligence include stress management skills, empathy, conflict management, social responsibility and emotional self-awareness.

4. Leadership potential. Physician leaders are often appointed without formal background or mentoring, which can make the transition feel like 0-100 mph acceleration in terms of workload and expectations. A recent survey of medical residents, for instance, found only nine percent think they're prepared for the "business side of medicine."

"Physician executives have to be the visionaries of what's to come and why the hospital's strategy has to be this way," says Mr. Fralicx. "They are all very smart people, but that's not something they were trained to do."

Natural physician leaders are a rare but powerful breed. They act as translators and can help break through departmental jargon — either clinical or financial lingo — to find middle ground between the various components of a hospital. For example, it's rare to find a physician who can accurately and effectively communicate a hospital's financial statements to other physicians. However, that’s not to say that these competencies and skill sets cannot be taught and reinforced through practice.

"When you get it right, it's a very powerful combination of leadership skills," says Mr. Fralicx. "You'll have a leader with clinical and financial perspective. Who is better than that to make decisions?" These skills aren't just related to financial literacy, however, but also the ability to inspire people and express visions.

Learn more about Hay Group.

Related Articles on Hospital-Physician Relationships:

5 Key Trends for Physicians in 2012
Hospitals Buying Physicians: 15 Recent Transactions
No Such Thing as the Perfect Physician Cash Compensation Model

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