CASE - ORLANDO FAMILY PHYSICIANS Pay for Performance

Questions

1. As a starting point, use last year's allocation of $600,000 for base salary and $120,000 for bonuses. What would be the total compensation of each physician if performance pay is based solely on a productivity measure only? That is, 100 percent of performance pay based on patient visits (0 percent for all other productivity, financial, and quality measures), 100 percent based on work RVUs, or 100 percent based on professional procedures. Are the results consistent among measures?

2. Now, focus exclusively on a financial performance measure. That is, 100 percent of performance pay based on gross charges (0 percent for all other productivity, financial and quality measures), 100 percent based on net collections, or 100 percent based on net income before physician compensation. Are the results consistent among the measures?

3. Finally, what if only a quality measure is used? That is, 100 percent of performance pay based on average patient satisfaction score (0 percent for all other productivity, financial and quality measures), 100 percent based on blood pressure control target met, or 100 percent based on breast cancer screening target met. Are the results consistent among measures?

4. One physician wants to base all compensation on performance. Assume that all of last year's total compensation of $720,000 is allocated based on a single performance measure. What would be the total compensation of each physician based on each financial, productivity and quality measure? Comment on the results.

5. Considering all relevant factors, develop a recommendation for the compensation plan to be implemented at the practice. Be sure to include the following factors in your recommendation.

a. How much total compensation (base salary plus performance pay) should be allocated?

b. How should the total dollar compensation be allocated between base salary and performance pay?

c. What percentage of performance pay should be allocated for productivity? For financial performance? For quality?

d. Which productivity, financial performance, and quality measures should be used to allocate performance pay and what percentage of performance pay should be allocated to each measure? Explain your choices.

e. For each physician, compare current total compensation to the compensation after your pay for performance. Which physicians would gain and which would lose compensation? What is an implication of the gains and losses?

6. In your opinion, what are three key learning points from this case?

Attachment:- Case.rar