Reworking Academic Medicine's Compensation Models

In these days of increased pressure on medical centers to maintain solvency, the days of the typical "sheltered workshop" of salary-based academic medicine are quickly coming to an end. With the uncertain terrain of health care reform looming on the horizon, paired with an economy that has hit the brakes, a new trend is sweeping academic medical centers: reworking compensation models for academic specialists that tie their doctors' "productivity" to conventional benchmarks published by the Medical Group Management Association (MGMA).

Increasingly, program directors are under pressure to increase their divisions' revenues. Aggressive expansion plans initiated just before the market crash have put additional onus on centers to fund their growth plans since the ability to rely on cash reserves has dwindled. Academic medical centers have historically had more overhead costs than leaner private hospital systems and are increasingly turning to cardiology, orthopedics, radiology, and oncology services to make up their economic short-fall.

But should the MGMA data (which is based on productivity benchmarks from busy private practice groups or clinical hospital systems around the country) be used as an academic specialists' measure of productivity? How does one measure, based on MGMA data, the "value" of an NIH grant, writing a peer-reviewed article, performing clinical research, or teaching medical students? Is a clinical productivity benchmark based on the flawed RVU system the best way to measure academic productivity? What effect does using such a clinical benchmark have upon academic physician's behavior? Will using these benchmarks compromise medical student training as their teachers place increased importance to clinical productivity (carefully tracked by electronic medical records) over their teaching responsibilities?

These are perplexing issues for many academic centers, but increasingly, the term "pay for performance" no longer means simply "pay if your famous." Now, it's turning to "pay if you build volume." In that respect, if clinical research generates testing spin off (hence revenue), well then, it's okay. If the research is simply a cerebral exercise for the sake of advancing science, these days researchers are encouraged to reconsider.

Building a Compensation Model

There are two polar opposites of compensation models: (1) the "even-split" compensation model that assumes everyone does the same amount of work and therefore they should be paid the same, and the productivity, or "eat-what-you-kill" model. Each has their limitations.

For the even-split model, people must be comfortable with making the same income no matter how hard they work. In reality, people are never equally productive and the high producers inevitably cry foul when their less productive colleagues take more time off than they do but get paid the same. The "eat-what-you-kill" purely productivity model fails to engender cooperative efforts amongst the group and risks pitting doctors within the same group against each other as they work feverishly to assure their salary is secured. Initiatives that benefit the group as a whole are often ignored.

So which model to chose? Is there a compromise position?

Before leaping to a blend of the two systems, there are other considerations. For instance, how does a group compensate a person's efforts to grow business in a new market? Or how much value does the presence of a new research project have for the group? Will the compensation model permit enough time to work on the project? Also, how are subspecialists within a specialty compensated? In the case of a cardiology section, should those with nuclear imaging certification, interventional skills, or electrophysiology skills receive different pay for their skills? Finally (and perhaps even more importantly), what are the plans when people want to retire or leave the group? How would that be handled?

Finally, there's the issue of market-place compensation parity - especially in academics. Academic specialists often make less than private practice specialists because they do not typically own the equipment (and therefore can't garner the technical fees) that generates a significant portion of private specialists' revenue. If the salary differential grows too large between academics and private practice, what incentive would there be to continue academic medicine long-term? In the past, royalties and speaking engagements have offset these disparities. Now with Congress scrutinizing these arrangements and the potential conflicts of interest they invite, medical centers are increasingly turning to gain-sharing incentives to retain highly sought-after clinicians. But these incentives require clinical, measurable work to justify the additional compensation. Teaching and research simply have no markers for remuneration with that model. Look for these endeavors to get short shrift in the years to come.

Ultimately, it is up to each academic group to determine the best model for themselves. What is clear is that simple salary models are unlikely to fly any longer in today's highly competitive clinical health care market. Therefore, developing a transparent, workable compensation model is critical to maintaining some semblance of job security and satisfaction for the uncertain times ahead. Unfortunately, the days of sitting back on the laurels of one's academic credentials has left us long ago.

-Wes