One key to creating a performance-driven culture in any organization is making sure that how we reward our staff is aligned with our performance goals. While “rewards” come in many forms, this obviously raises the question, how are you going to pay your staff?
Performance-based compensation, while common in many fields, is a rarity in health and human services. Moving to performance-based compensation is a big task – with implications for financial operations, recruiting, and supervisors. Yesterday, at The 2016 OPEN MINDS Performance Management Institute, I looked at a few fundamentals you need to take into account beyond “making more money” in my pre-institute seminar – Implementing Performance-Based Compensation – Current Models, Issues & An Approach To Successful Implementation. The first is how to build a compensation strategy that aligns with your overall strategic goals and the second is to decide how to measure clinical productivity.
Decide how to develop a compensation strategy that works for your organization – Adopting a performance-based compensation model is essential to ensuring that you get the best return-on-investment (ROI) from your human capital. But, this is only is effective if you align your organizational compensation strategy with your strategic goals. To do this, there are a few best practice tips to keep in mind when developing a model:
- Establish specific goals for your comp model – Start by establishing objectives that align with your overall organizational strategy. If you create a plan that is incentivizing behavior that is incongruent with your organization’s core mission, it will ultimately create confusion for your staff. Then, work out the details – make the goals as clear as possible, determine the measurement methodology, and determine what incentives will be used.
- Determine what incentive compensation you can afford. Will that be bonuses, profit sharing, percentage of billed services, percentage of collected bills, or something else?
- Determine when incentives will be paid – This means knowing who will provide oversight of the program; who will measure the program; and what the process will be for determining the payouts.
- Develop and implement a pilot program – After running this test of the new plan, modify your plan based on findings from the pilot, and be completely transparent about why changes are being made.
- Develop the full roll-out plan – When this is done, make sure that there is a strong focus on education and training for staff. Make a commitment to adjust the plan as needed.
Decide how to measure clinical staff productivity – This is a big and controversial issue in health and human services. You need to consider things like the number of clinical encounters, gross billing, net collections, and quality (re: clinical satisfaction, peer review, committee work, administrative work, etc.). In addition, we need to determine what non-quantitative items should be included in the model, e.g., indirect service time, telephone based services, etc. In one example, a health system is looking for a total productivity contribution per clinical team member of 31 hours per week – with each billable hour of service worth 1.0 and each non-billable your of service (for example, telephone care coordination, documentation, and supervision) worth 0.25.
What does this look like in practice? This afternoon as a follow-up to my seminar, OPEN MINDS Senior Associate Joseph Naughton-Travers and Carrie Nelson, M.D., Senior Medical Director, Advocate Physician Partners in his session, Models For Physician Compensation & Productivity Management: How Provider Organizations Are Negotiating Clinical Staff Contracts. In the session, Dr. Nelson gave an example of a model for physicians at Advocate Physician Partners, a care management collaboration that works with Advocate Health Care system. Within Advocate, employed physicians have a 95% of physician salary as base and a five percent withhold based on performance. Physicians are also eligible for an additional bonus based on performance. The performance is based on a combination of factors – including clinical health outcomes, such as patient safety, care coordination, and clinical integration; and patient experience ratings.
In the future, I expect we’ll see more organizations working to align staff compensation with overall organizational performance goals. For more on staff compensation modes, see Compensation Model Second, Strategic Plan First; When It Comes To Compensation, Proceed With Caution; and Maximizing Your Team’s Performance: A Look At Productivity Management & Performance-Based Compensation Models. For more on the importance of performance in the health and human service field, stay tuned tomorrow for more coverage of The 2016 OPEN MINDS Performance Management Institute – we will be covering the event live through our Daily Executive Briefings and on Twitter @openmindscircle – #OMPerformance. And elite level OPEN MINDS Circle members can access all the institute presentations after the event.