Compensation Monitor

Fewer annual incentive programs offered to docs

There are fewer annual incentive programs being offered to physicians, according to a new report from the Hay Group, a global consulting company. In the most recent report, “2011 Physician Compensation Survey,” the group says that these programs decreased slightly from their highest reported usage of 69 percent in 2010 to 64 percent in 2011. Twenty-three percent of respondents reported that they do not have annual incentive programs, nor do they plan to implement them in the future.

Annual incentive programs to dip slightly (% that have programs)

“The decline this year is surprising,” says Jim Otto, senior principal in the Hay Group’s health care practice. “When you look at the six-year trend, you can see the usage increasing, with a slight dip in 2011. We’ll keep a close eye to see what is reported in 2012. Incentive plans, or at-risk pay, is a great tool to help shape behaviors. It’s a way for owners of an organization to get physicians to focus on key metrics and provide a reward at the same time.”

These programs provide incentive pay based on short-range performance — typically a year or less. Annual incentive programs may consist of short-term incentives and may include a component tied to long-term incentives. These incentives may be based on stock, cash, or both.

Annual pay to rise 2.5% next year

Overall, physicians in all types of organizations can expect smaller salary increases in 2012 than this year; salary increase budgets will drop to 2.5 percent from 2.7 percent in 2011. According to the report, however, the physicians who work in group practices will fare better than their hospital-based counterparts.

The report says that all physicians who are group-based can expect to see salary increases of 3.2 percent in 2012. Looking at specialists only, those who are group-based will see a 4.5 percent salary increase in 2012.

Comparing these numbers with hospital-based physicians shows that all physicians who are hospital-based will see a salary increase of 2.5 percent, from 2011 to 2012. Specialists who are hospital-based exclusively will see a salary increase of 2.4 percent during the same period. The group surveyed 144 physician specialties, including 35 pediatric specialties, 30 non-physician provider positions, and 19 medical directors. The report also says that the largest median base salary increase movement for 2010 and 2011 were for the following staff physician positions: oncologists (13 percent change); dermatologists (9.9 percent change); pediatric neurologists (9.1 percent change); pediatric intensive/critical care physician (8.8 percent change); and oncologic gynecologists (7.7 percent change).

On the other end of the salary spectrum are physicians who will see the largest decrease in median base salary for 2010 and 2011. These physicians were: hematologists (−5.4 percent); nuclear medicine physicians (−6.4 percent); pediatric hematologists (−10.1 percent); anesthesiologists who were medical directors (−10.1 percent); and family practice physicians who were medical directors (−11.3 percent).

When determining base pay structure, 50 percent of organizations set physician pay on an individual basis, 28 percent establish formal salary ranges, 18 percent use market rates, and 1 percent use step-rate progression. According to the 2011 report, measures for determining payouts are dominated by quality and patient satisfaction.

Source: Hay Group, 2011 Physician Compensation Executive Summary

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