Recommendations - How to structure Partner Compensation

[Jay K]

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Our group is considering changing the way it compensates partners. I'm curious to know what the private guys in this forum consider a fair and equitable manner for a group to structure its compensation model. If you think your group does it right, would you mind sharing? PM's are fine if you don't want it out in such an open forum. We're looking for ideas as our current model may no longer be optimal as we expand, volume of cases change and types of cases/coverage evolves. For better or worse, CRNA's are also a part of our practice model.

 

[urge]

My only requirement is a sht load of money. Got that?


Kidding aside, just let me keep what I bill.

 

[Jay K]

My only requirement is a sht load of money. Got that?


Kidding aside, just let me keep what I bill.

Meaning you're a true "eat-what-you-kill" model where you bill directly for the case you did, or are you a production based system where you bill for units, lump the payments into a central pot, then divide at the end of the month by units accumulated per partner?

You're a 1099 or W-2?

Paid once a month?

Stipend for call?

I'm looking for details if anyone cares to provide; Like I said, we're possibly overhauling the whole compensation system for a large group.

 

[scoobydum]

Hi Jay.

We have what I think is a pretty fair practice. Basically, all the billing revenue is pooled into a common pot and distributed out to the partners based upon the amount of work (i.e., units) that they performed. In addition, everyone receives a stipend for each 1st call they take. This prevents cherry picking of cases. If you work more, you take home more. Bonuses, if any, are distributed quarterly after common expenses (i.e., malpractice) and personal expenses (health insurance) are taken into account.
Billing company charges between 7-10% but I'm not sure of the exact percentage. Hope this is helpful.

 

[Jay K]

scoobydum - thanks for the reply. When you says units (is that ASA units)? How do you avoid cherry-picking? Are your units based solely on time? For instance, a great room to be in would be the ENT room where you'd do a ton of tonsils or ear tubes and rack up startup units. Do you guys halve the startups? What do you pay for 1st call in the way of stipend? Do you differentiate the types of call? Cardiac, OB, Neonatal, General, etc.? Where does a bonus come from if you divide the pot by units?

As an aside, your billing company charges are huge - even at 7%! Again, if anyone is more comfortable sharing specifics (ie: numbers) via PM, that is appreciated as well.

 

[IlDestriero]

scoobydum - thanks for the reply. When you says units (is that ASA units)? How do you avoid cherry-picking? Are your units based solely on time? For instance, a great room to be in would be the ENT room where you'd do a ton of tonsils or ear tubes and rack up startup units. Do you guys halve the startups? What do you pay for 1st call in the way of stipend? Do you differentiate the types of call? Cardiac, OB, Neonatal, General, etc.? Where does a bonus come from if you divide the pot by units?

As an aside, your billing company charges are huge - even at 7%! Again, if anyone is more comfortable sharing specifics (ie: numbers) via PM, that is appreciated as well.

Here's 2 I liked.
One PP group I looked at was pure eat what you kill with 1/2 starting units to group pot. Quarterly equal bonuses of residual regardless of units billed. Call was equally distributed, all took overnight call from home. The pre call person set the schedule for the next day, so everyone got to give themselves the cash cow ENT room. Insurance info was not on the schedule, so you couldn't assign based on that.
Another was like the one mentioned above, liberal vacation, call was paid by a stipend from the hospital. All units were pooled. You drew a salary every month (12-16000 by report) and the residuals were doled out based on % of units quarterly. If you overdrew, you got a bill. Some took 6 wkd off and made $$ others took 12 and went fishin'

 

[scoobydum]

sorry, i overestimated. its about 3.5%.

 

[kmurp]

I think that it would be near impossible to get good advice on this forum with the paucity of information that you have provided. Are you an ACT or mixed model? Single facility? Everyone does all the same cases etc?
There are consultants with experience in these matters who can help you. If you are a large group, you can afford them. You can't afford to set up a bungled compensation structure as this could potentially threaten your groups' survival if done poorly.

 

[Voodoo]

Hi Jay K - when I was looking for a job, I saw a whole bunch of models. I chose this job because I found it to be quite fair (among other reasons). So here it is:

1) We unit pool (throw all revenue collected in pot and distribute it by number of units billed by the partners) to factor payer type out of the equation.

2) Cases sat from 7 am until 4 pm are subject to our split: individuals keep 66% of billing, 33% is evenly distributed among partners. Weekend, holiday, and night time billing is 100% kept by the person doing the case. I have found that this discourages case stealing (because the more you make, the more you end up paying back to partners), but it also discourages the laziness I found in salaried positions.

3) There are an equal number of calls - no stipends. Everyone works one major holiday (thanksgiving, christmas, or new years) and one minor holiday (labor day, memorial day, 4th). If you want to get rid of it, you can offer it up - sometimes someone will do it just for productivity (you keep 100% on holidays) or sometimes you have to offer some $$ (depends on how badly you need that time off). Getting rid of call is fairly easy, as you keep all of this billing for yourself.

4) Making the daily schedule - we have an average daily billing (ADB) system which keeps track of your rolling billing over the course of a year. Vacation days DO NOT COUNT as a 0 unit day. Our schedulers make the assignments and someone reviews the schedule (one of 6 members of our executive committee). If you have a high productivity day scheduled and you have a higher than average ADB, they may substitute someone with a lower average in. Over the course of a year things are so diluted that if you are high up on ADB no one is going to take a ENT or joint day away from you because it pretty much evens things out over a period of time. What it does is eliminate those troublesome partners who call our schedulers demanding to have total joint days on a daily basis - that practice stopped when we implemented this system 18 months ago. ADB is only tracked from 7 am until 2 pm, so picking up extra cases at night is not an issue (i.e. no one thinks that they shouldn't pick up cases because it might raise their ADB and then they will have a less lucrative day later on because of it).

Hope this helps.

 

[GoodmanBrown]

Here's 2 I liked.
One PP group I looked at was pure eat what you kill with 1/2 starting units to group pot. Quarterly equal bonuses of residual regardless of units billed. Call was equally distributed, all took overnight call from home. The pre call person set the schedule for the next day, so everyone got to give themselves the cash cow ENT room. Insurance info was not on the schedule, so you couldn't assign based on that.
Another was like the one mentioned above, liberal vacation, call was paid by a stipend from the hospital. All units were pooled. You drew a salary every month (12-16000 by report) and the residuals were doled out based on % of units quarterly. If you overdrew, you got a bill. Some took 6 wkd off and made $$ others took 12 and went fishin'

ID, how much does salary vary month to month in an eat what you kill scenario? Suppose you have a bad month with lots of Medicare/Medicaid/self-pay?

 

[IlDestriero]

ID, how much does salary vary month to month in an eat what you kill scenario? Suppose you have a bad month with lots of Medicare/Medicaid/self-pay?

If you take 2 weeks off and draw the MediCal short straw more than average, and don't get any lucrative ENT ASC assignments, you're not making your house payment. Of course, you make it up the next month when you are working 20 days straight. Over the year it should all work itself out. There are ways to work any system. Collusion will get you fired though. One job I considered in CA was hiring because of this very problem. They had recently fired 2 partners for unethically manipulating the schedule to their advantage. It was not a well thought out plan as the books are not secret and there were only 10 of them. It didn't take long for the managing partner, the one that signs all the checks, to notice that 2 of the guys were consistently getting a higher check than everyone else in the group. They all took turns assigning the cases and those two were using insurance information from the hospital database to set the assignments for the day. They were actually so desperate to get another body there ASAP that they dropped the partnership track down from 2 to 1 year. Losing 20% of the workforce for several months has a way of decreasing morale. The location was OK, but not any great draw and you needed a Peds fellowship, so there's a limited pool of applicants.
Pooled units is great if you can get it. It makes things very fair. Especially in places like CA where the difference between MCal and insurance is often >3 times.

 

[GoodmanBrown]

If you take 2 weeks off and draw the MediCal short straw more than average, and don't get any lucrative ENT ASC assignments, you're not making your house payment. Of course, you make it up the next month when you are working 20 days straight. Over the year it should all work itself out. There are ways to work any system. Collusion will get you fired though. One job I considered in CA was hiring because of this very problem. They had recently fired 2 partners for unethically manipulating the schedule to their advantage. It was not a well thought out plan as the books are not secret and there were only 10 of them. It didn't take long for the managing partner, the one that signs all the checks, to notice that 2 of the guys were consistently getting a higher check than everyone else in the group. They all took turns assigning the cases and those two were using insurance information from the hospital database to set the assignments for the day. They were actually so desperate to get another body there ASAP that they dropped the partnership track down from 2 to 1 year. Losing 20% of the workforce for several months has a way of decreasing morale. The location was OK, but not any great draw and you needed a Peds fellowship, so there's a limited pool of applicants.
Pooled units is great if you can get it. It makes things very fair. Especially in places like CA where the difference between MCal and insurance is often >3 times.

What keeps groups from going to a pooled pay? Inertia? Seems like it reduces some of the shenanagins and can even out monthly pay. Win-win to me.

 

[GoodmanBrown]

2) Cases sat from 7 am until 4 pm are subject to our split: individuals keep 66% of billing, 33% is evenly distributed among partners. Weekend, holiday, and night time billing is 100% kept by the person doing the case. I have found that this discourages case stealing (because the more you make, the more you end up paying back to partners), but it also discourages the laziness I found in salaried positions.

Did you mean "Cases set from 7 am until 4 pm"? I just ask because if you mean "Cases Saturday from 7am to 4pm" it changes your meaning. I assume it's the former, as the latter kinda throws off the rest of the point.

In terms of split, I hope I'm not being dense by double-checking that even for weekend, holiday, and night, you're getting paid by the pooled billing amounts and not 100% of what your actual billing is, right?

3) There are an equal number of calls - no stipends. Everyone works one major holiday (thanksgiving, christmas, or new years) and one minor holiday (labor day, memorial day, 4th). If you want to get rid of it, you can offer it up - sometimes someone will do it just for productivity (you keep 100% on holidays) or sometimes you have to offer some $$ (depends on how badly you need that time off). Getting rid of call is fairly easy, as you keep all of this billing for yourself.

4) Making the daily schedule - we have an average daily billing (ADB) system which keeps track of your rolling billing over the course of a year. Vacation days DO NOT COUNT as a 0 unit day. Our schedulers make the assignments and someone reviews the schedule (one of 6 members of our executive committee). If you have a high productivity day scheduled and you have a higher than average ADB, they may substitute someone with a lower average in. Over the course of a year things are so diluted that if you are high up on ADB no one is going to take a ENT or joint day away from you because it pretty much evens things out over a period of time. What it does is eliminate those troublesome partners who call our schedulers demanding to have total joint days on a daily basis - that practice stopped when we implemented this system 18 months ago. ADB is only tracked from 7 am until 2 pm, so picking up extra cases at night is not an issue (i.e. no one thinks that they shouldn't pick up cases because it might raise their ADB and then they will have a less lucrative day later on because of it).

Hope this helps.

Are there any groups who try to pay via hours worked instead of work billed? It seems from the discussion that a snappy joint or ENT room is the most lucrative OR to be in because of the rapid turnover (with the associated start-up fees). So, do some groups do a "total hours worked" pay so that the anesthesiologist who's working the joint room takes home the same pay in 9 hours that the guy on the longer gut case does?

My thinking is that then there's even less worrying about which room you're working in for the day.

 

[IlDestriero]

Are there any groups who try to pay via hours worked instead of work billed? So, do some groups do a "total hours worked" pay so that the anesthesiologist who's working the joint room takes home the same pay in 9 hours that the guy on the longer gut case does?

My thinking is that then there's even less worrying about which room you're working in for the day.

That would be more like a salary position? Work 200 days get $400k. Any remainder gets split. I used to have a salary position that payed hourly incentive time for staying late (after 3 or 5 depending on if you were alone or supervising a resident/fellow).

 

[GoodmanBrown]

That would be more like a salary position? Work 200 days get $400k. Any remainder gets split. I used to have a salary position that payed hourly incentive time for staying late (after 3 or 5 depending on if you were alone or supervising a resident/fellow).

Hmm... I guess so. I think of salary vs. hourly pay differently than perhaps health workers do. To me, a true salary position doesn't have overtime. So, at my current job, if I work 40 hrs/wk or 50 hrs/wk, my paycheck doesn't change. I think that's very rare in health care.

So, my idea was, work however many hours you want (over a certain minimum, say 1500 or whatever), and you'll just get paid an hourly rate. That rate would change depending on the group's revenue and total hours worked that month, but overall it should track at a pretty steady amount.

If there's not enough people taking call, maybe put in an appropriate differential where each hour counts for 1.5 hours pay or whatever. Just my 2 cents.

 

[Voodoo]

Hi GoodmanBrown -

1) by sat, I was referring to chair time (i.e. past tense of sit), not saturdays, so your assumption is correct.

2) Yes, on weekends/holidays/nights, the 100% refers to pooled billing amount, not actual billing (so no prob with medicare/medicaid)

3) Yes, to my knowledge, the Valley group in Phoenix (approx 150 anesthesiologists) does something similar to this (paid for chair time). I've heard that anesthesiologists are happy with this system.

Hope this helps.

 

[Mman]

I like our system. All money comes in for a month and first pays out expenses and then the rest is split equally amongst partners. Call shifts and vacation are split equally amongst all. If everybody is equal, nobody can complain about how crappy they have it. It's good for harmony in the group.

 

[drccw]

our system is this:
everybody draws a set salary...
everybody has same amount of vacation
everybody takes the same amount of call

Money left over at the end of each quarter is split evenly as a bonus...

nobody fights for cases.... we got one guy who loves doing endo, so he does endo all day.. and a gal who does breast all day... people kind of fall into their niches.. it's nice

drccw

 

[kmurp]

Sounds like most of the above systems are for all MD groups. For us, in a mixed model, your "productivity" varies with the # of rooms you direct. As cardiac is solo MD for us, our cardiac guys would get screwed were we to use units.
We all do the work and split the money evenly.

 

[GoodmanBrown]

Hi GoodmanBrown -

1) by sat, I was referring to chair time (i.e. past tense of sit), not saturdays, so your assumption is correct.

2) Yes, on weekends/holidays/nights, the 100% refers to pooled billing amount, not actual billing (so no prob with medicare/medicaid)

3) Yes, to my knowledge, the Valley group in Phoenix (approx 150 anesthesiologists) does something similar to this (paid for chair time). I've heard that anesthesiologists are happy with this system.

Hope this helps.

Most definitely helped. Thanks to you and ID for the help. Trying to learn as much as possible about all aspects of medicine before starting school.