Downtown Family Physicians Case Summary

Facts
Bangor Family Physicians is a medical group practice has four family practice physicians and twelve medical support staff members. The practice is organized as a partnership, with each physician having equal share and receiving equal compensation, “equal work for equal pay”.
Issue
The physician partners are discontent with the current compensation model and want those physicians that are truly working harder to be rewarded, as well as create an incentive for all physicians to be as productive as possible.
Background
Compensation Models:
1) Revenue model: the physician is paid based on actual revenue generation;
2) Net income model: in comparison to revenue model, this model also considers costs. Thus, the physician is paid based on revenue generation and the costs incurred by physician;
3) Base salary plus productivity model: under the model, the physician receives base salary and additional compensation based on chosen productivity measure (revenue or net income).
4) Multiple factor performance model: the physician is paid based on financial and non-financial measures.
Under revenue and net income model, performance compensation of physician D is the highest, as D’s contributions to total revenue is the highest. Based on Work RVUs, physician C will receive

Including non-economic factors into performance is crucial to avoid financial indicators manipulation and ensure high quality of services provided. To boost collections and income the physician can compromise quality of services and decrease time per patient. Thus, for example, physician B has average revenue collections and net income, however, his/her average patient score and leadership skills are the highest. Therefore, to promote quality and lead by example behavior, the hospital should adapt mode based on multiple