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Compensating group practice partners. (Practice Management).

Article Excerpt
Physician compensation--often called "income division" in smaller group practices--is clearly one of the most difficult concerns for physicians working together as partners. (1) And yet, every group must periodically face the challenge of whether to establish the "right" formula the first time or to re-evaluate it as conditions change in the practice, its dynamics or its environment.

It's no secret that financial incentives influence physician behavior--most people's behavior, for that matter. That's why group leaders must accept the idea of recognizing and compensating individual behavior when structuring pay for their partners. Doing so involves two important steps:

1. Design incentives that reward physicians for behaviors the group wants to encourage.

2. Make sure those incentives don't violate Stark anti-kickback regulations.

Getting independent-minded physicians to agree on what the group collectively wants isn't always easy -- sometimes it represents a miracle just a notch or two below the loaves and fishes.

Although there's no universal solution, making the effort to identify your group's objectives provides the best shot at developing bonus incentives to drive group members toward them. Texas consultant and accountant Reed Tinsley, CPA (2) offers this list of possible factors on which groups could base incentives:

* Individual performance. You can't ignore the fact that directly rewarding hard work nudges people to work hard.

* Group profitability. Establish a group view...