Interview: How to create a value proposition to retain physicians

Deb Beaulieu

As practices know, physician turnover is both costly and time-consuming to resolve, especially if you're in an area or specialty experiencing a shortage of doctors. FiercePracticeManagement caught up with Jim Moniz, president of compensation and management firm Northeast VisionLink in Braintree, Mass., to discuss some of the latest trends for attracting and keeping physicians.

FierceHealthcare: What are some of the common mistakes practices make with their recruitment strategy?

Jim Moniz

Jim Moniz: Practices often focus too much on the practice as a whole without developing strategies that speak to doctors as individuals. A framework for building--and communicating--a balanced approach to compensation must give proper weight to short- and long-term incentives for physicians, as well as fixed and variable pay.

FH: What are some examples of effective long- and short-term incentives?

JM: Competitive salaries with bonuses are fundamental in attracting top-notch physicians, specialists and surgeons. However, to keep physicians, practices must create a value proposition that allow physicians to grow their wealth over time.

Phantom stock, for example, is an equity incentive that can be tied exclusively to performance. Phantom stock plans are not tax-qualified, and therefore, not subject to the same tax rules as 401(k) plans. Ideally, a phantom stock plan can act as "golden handcuffs," making a key member of a practice think twice about moving on to another opportunity.

Another option gaining in popularity is offering physicians deferral plans, attractive because they allow for pre-tax contributions that mirror 401(k) contributions lost under limitation rules. Because it allows physicians to reduce their current income tax liability and watch funds grow tax-deferred, it's almost like a bonus that keeps giving year round. Groups that want to offer even more incentive for longevity can match deferral plan contributions to cover those not allowed under a 401(k) plan.

FH: How can practices evaluate whether their incentive plans will work without waiting to see whether physicians stay or go?

JM: Practices need to measure and monitor key indicators tied to any reward strategy to ensure its success. For example, practices need to consider how much revenue physicians already bring in for what they do. A general practitioner, for instance, may see a high number of patients at relatively low incoming revenue per patient, compared with a surgeon who generates larger revenue with just a couple procedures. So, it can be difficult to determine the extent to incentivize physicians, as the number of patients seen and revenue generated can vary widely. Ultimately, any incentive program must be built for the long-term so that a higher probability for retention exists.

The role of indicators is to improve performance, influence behavior and create focus. These far-reaching elements can only be accomplished through communication and consistent reinforcement that promotes a practice-wide mindset of employee ownership.

FH: How can practices that may be struggling financially spend more on retention incentives?

JM: Here's the bottom line: Compensation strategies must not only meet the needs of the medical group, but they must also speak to the individual goals of key physicians. If a doctor has a clear vision of how his or her performance impacts group performance overall, a vested interest in the organization's success is developed, thereby creating a sense of ownership for the physician. This ultimately leads medical groups on a path toward greater revenue growth.

This interview has been edited and condensed for clarity.