3 tips for linking pay to performance

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For compensation plans to be effective, they must be tied to quality performance, healthcare experts say.

The average projected merit increase during the past 12 months across all healthcare staff positions is 2.2 percent, the same percentage predicted for the next year, according to HR consulting firm Integrated Healthcare Strategies and the American Society for Healthcare Human Resources Administration.

However, those increases should account for multiple factors, such as compensation philosophies, hiring policies and incentive plans.

"For a staff total compensation plan to be truly effective, it must consider more than just base pay," Kelly Taylor, senior consultant in the staff and director compensation services practice of Integrated Healthcare Strategies, said in a statement Thursday.

When conducting a quality pay program--whether it's with the health system, insurer, accountable care organization, patient-centered medical home or some other organization--make clear to physicians what metrics they must meet for compensation, American Medical News reported.

Consider some other tips:

1. Measures should be relevant
For instance, if the major initiative of the organization is to make progress on chronic obstructive pulmonary disease, the compensation program should include quality markets related to COPD, amednews noted.

2. Measures should be a reach but attainable
Early success can be motivating, but goals shouldn't be too easy either, consultants say.

"It's important that the goal be attached to a measure that is realistic but be a stretch," James Otto, a senior principal with Hay Group, told amednews.

3. Get buy-in from the entire organization
And finally, both employed and independent physicians, as well as other staff, must cooperate to ensure success. Brent Asplin, president of Fairview Medical Group in Minneapolis, described quality measures as a "team sport." In April 2011, Fairview Medical Group shifted compensation for its 500 employed physicians to a model that bases about 40 percent of total pay on quality measures. "It takes everyone working towards the same goals," Asplin said.

For more information:
- see the IHS statement
- read the amednews article

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