Your Associate Candidate Wants to be Paid How Much?
Get the doctor you want to join your practice--without breaking the bank.
By Jeffrey P. Thompson

You're seeking to hire a new physician and wondering:

• How much should I be paying this person?
• How can I afford to pay him as much as he's expecting to get?
• How can I keep this great prospect from going to another practice that's offering more money?

If you're asking yourself these and other questions about new physician compensation, you're not alone. Practices throughout the country are struggling with the same issue. It's more of a struggle today than ever. That's because the dynamics of managed care have so dramatically affected practice profits and the manner in which you can operate your business.

It's my experience that those physicians who use the methodology I'll outline in this article do significantly better in hiring and retaining quality physicians. In those practices, compensation becomes a nonissue because they begin by establishing the right base for determining pay levels.

Some givens

Here are some basic assumptions you can make:

• You're in business to make a reasonable profit.
• Every practice is different, and industry compensation studies are only guidelines.
• Helping a new physician build a strong, multifaceted foundation will assure his success and yours.
• A new physician should be expected to contribute to the growth of the practice in many ways.
• "Carrying" a new physician until he can contribute to practice profitability reduces both your income and that of your partners.
• A new physician knows nothing, or next to nothing, about the mechanics of running a business.

Questions to consider

With these assumptions in mind, you can begin the process of determining proper compensation for any new physician you plan to hire.

The compensation issue begins with the hiring process. Here are a few initial questions you should consider:

• Why does the practice need to hire a new physician?
• What type of person would complement your strengths and limitations and those of your colleagues?
• What are the character traits and behavior that would best complement the staff?
• What nonclinical responsibilities should be assigned that would assure that the new physician can help create a solid base on which to expand the practice?
• What kind of things did you do to help establish yourself as a young physician?

Sizing up candidates

Accepting nonclinical responsibilities is key to a new physician's success. Use the interviewing process as a way to determine if the new physician will be able to:

• utilize interpersonal skills to develop acceptance by patients, physicians and practice staff
• maintain and display a consistent level of effort and commitment to handling all patient matters in an efficient and effective manner
• accept practice responsibilities that include, but are not limited to: call duty, attending meetings as required, complying with all practice policies and procedures, as well as those at various hospitals and clinics where privileges have been extended, and taking an active role in understanding and promoting the goals and objectives of the practice
• demonstrate the ability to work together with other physicians and staff in coordinating patient care and effectively dealing with practice issues
• understand and completely adhere to the current practice compliance program and the employee policy manual
• perform any other administrative or clinical duties deemed necessary by the owners to achieve practice goals.

Use a compensation model

Choose from among the many traditional compensation models, or from those that may be more suited to the current business environment. The most effective compensation plans will share in the risk of ultimate compensation. Another way of looking at this is that a model that creates incentives for both parties to work together for the benefit of the entire organization and the patients is ultimately the best compensation plan.

Consider the actual compensation contract reproduced on page 51. This plan was recently developed for a new physician. It's somewhat nontraditional and accomplishes the goal of sharing risk. Further, it rewards behavior that establishes a solid foundation.

Everyone benefits

Managing the compensation issue is essentially an educational process. Accordingly, it must be well thought out in advance of the interviewing process, tailored specifically to the needs of your practice and then "sold" during the interview. Handled correctly, the model on page 51represents a very attractive alternative that has everyone benefiting from the success of the new physician. More importantly, as specific goals are attained, you become certain that a viable practice is growing in a responsible and profitable manner. 

Jeffrey P. Thompson, a principal of JP Thompson & Associates, is a nationally recognized physician consultant, speaker and writer. For more information on specific compensation issues or other practice concerns, contact him at (732) 528-7645, via e-mail at jpt@jpthompson.com  or visit his Web site at www.jpthompson.com.