As more and more of a practice’s income comes from payments related to meeting specific goals such as quality measures and patient satisfaction scores, the question of how to divide the money among members of the practice becomes an increasingly important consideration, especially in those areas where staff participation can impact the amount of bonus income the practice receives.
With lower reimbursements and the spiraling costs of providing care, physicians may be tempted to keep much of this “new money” for themselves. Given the impact staff interactions can have a on how well the practice does, however, this may turn out to be penny wise but pound foolish.
“It is well established that staff have a tremendous impact on services provided by a doctor’s office,” said Mary Witt, senior vice president at The Camden Group, a health care management and consulting company based in El Segundo, Calif. “For example, patient satisfaction surveys have a number of questions that aren’t related to the physician. Activities like how well the phones are answered and the experience during signing in at the office are a result of staff behaviors.”
—Joe F. Smith, MD
Studies of hospital employees have shown that unsatisfied health care employees negatively affect the quality of care. This, in turn, adversely impacts patient satisfaction and loyalty—a possible double financial whammy as both governmental and private payers roll out programs paying separate incentives for quality and satisfaction (J Health Care Mark. 1996:16;14-23).
“It has to be understood that no doctor can do their work without staff,” said David Hunter, MD, FACS, senior partner of Oklahoma City Ear, Nose, and Throat Clinic in Oklahoma City. “You always have to think about ways to give employees a reason to be conscientious and stay on the job.”
The problem then becomes finding the best way to incentivize the staff to fulfill their part of the myriad new quality and patient satisfaction goals for which the practice is responsible. At the same time, practices still have to be able to keep the doors open and the doctors paid. Part of the confusion stems from the many ways bonuses and other incentives are being paid to the practice.
“The change to pay-for-performance doesn’t always mean new money is coming to the practice,” said Ron Seifert, vice president and health care consultant with the Hay Group in Philadelphia. “While some private payers may give bonuses for meeting certain goals, others may just not give a practice as much of a yearly increase as they do those who make their targets.”
Thus, practices have to decide the circumstances under which they can give the staff extra money, how much to pitch into the pot and the best way to distribute it to the employees. Done poorly, an incentive plan can be counterproductive, undermining efficiency and morale. It can be hard for employees to be nice on the phone if they think they are not being treated fairly.
Divide and Dole Out
The first hurdle is whether a practice can afford to pay anything extra. “I am a firm believer that you don’t give bonuses when you don’t have money to give bonuses,” said Witt.
It is also very important to figure out how much the bonus is actually worth. Participation in some patient satisfaction programs, for instance, may require overhead such as an outside firm to administer and track the surveys. These extra costs to physicians should be repaid before thinking about other uses.
Another question to be considered early in the process is how to divide the remaining money. One way is to look at the measures for the bonus and split the money between the physicians and the staff based on the percentages of the criteria for which each was responsible. Using this method would mean that if the physicians were the focus of 70 percent of the survey, they would get 70 percent of the bonus.
If there is already a standing method to divide up money for other bonuses, such as meeting revenue or profit targets for the practice, these could also be used in this instance. Make sure that the staff understands the process, regardless of the method chosen.
“When changing from paying for volume to paying for quality and satisfaction, we need to consider putting at least some of the money into a pool for staff,” said Joe F. Smith, MD, an otolaryngologist with ENTcare in Dothan, Ala. “These models now mean that physician reimbursement will be based on more than whether or not I treat a patient right. It will also hinge on staff and their interactions.”
Actually dividing up any money available, whether from “new money” bonuses or from incremental increases in general reimbursements, is another decision management will have to make. For example, many practices have bonus programs for employees based on the practice meeting certain revenue and/or income performance targets.
To the extent that successfully meeting quality or satisfaction goals impacts reimbursement directly, this would be a good way to reward and incentivize your staff. Make sure that the criteria for meeting these milestones is incorporated into their employee performance targets.
Some private payers are beginning programs that will pay actual bonuses on top of regular reimbursements when certain goals are achieved. When additional money comes into the practice, equal division of the proceeds is recommended.
“I am firm believer that if everyone does the same amount of work, they should get equal pay,” said Dr. Hunter. “If we get the money, we’ll split [it] in a manner that is well understood.”
Not everyone agrees that this is a viable scenario in real-life situations, suggesting that even the bonus money should be folded in with the general incentives. “I think it would be more confusing to dole out money from a different pot,” said Dr. Smith. “We need to relay to our employees that new payment models mean that some of our reimbursement will be related to patient satisfaction, quality and other indicators that staff will impact on. The practice will take that into consideration, and their contribution will be rewarded.”
This is especially true in otolaryngology, as these practice groups tend to be much smaller. Fewer staff often means that there is less regimentation, with employees handling each other’s jobs at some time during each day. This makes it hard, if not impossible, to say who is responsible for what part of the bonus.
“Sharing also encourages everyone to be accountable to one another,” said Witt. “When each staff impacts the overall payment, it makes it easier for staff to have a conversation with their peers if they aren’t being patient centered. Their behavior affects everyone’s income.”
All those interviewed for this article agree that communication with the staff will be important, not only to make sure they are aware of what they need to do, but also to convey how important it is, both to them and the practice.
“It needs to be stressed that if the entire practice doesn’t do well on these measures, in many cases reimbursement may be lost,” said Seifert. “Money coming into the practice is no longer defined solely by volume but also quality and satisfaction outcomes. If we don’t move the needle on these things, we may not get as much money, and the impacts of not achieving these indicators are not good for the employee nor the practice.”
Care must also be taken in communicating that these payments to the practice, and thus to the staff, are not guaranteed. Even if the results are good one year, there can still be problems the next if the results fall. If employees don’t understand this, there could be hard feelings and anger later on.
“There are few hard and fast rules that Medicare and the other payers are willing to tell us about,” said Dr. Hunter. “We don’t know that if we do these exact things, we are going to get X amount of dollars. As this evolves, it is imperative that we keep the staff up to date and be upfront about what we do, or do not, know.”
Remind staff that there is a time lag before finding out how much money, if any, was awarded. This lag can make it harder for both staff and physicians to stay focused.
“These incentives are usually not awarded until the end of the year,” said Witt. “It needs to be reinforced, probably multiple times, that we won’t know the results, or see the fruits of our labor, until next year. If possible, the practice may want to spread the bonus throughout the year, possibly quarterly, to maintain momentum and continually reinforce the need to focus on patient satisfaction.”
Another concern is that there may not be feedback from the various payers on how well a group is doing. It is very likely that the practice may not hear from the insurers until the notification that they have, or have not, qualified for the money.
Communicating what the payers are basing their reimbursement or bonus decisions on should be a priority. To meet the criteria, the staff has to know what it is going to be. This, too, may turn out to be a moving target as many payers roll out what are likely to be different programs.
“As the information on these plans is released, embrace them and do the best job you can implementing them within the office to take care of our patients,” said Dr. Smith. “With great change comes great opportunities, and the ones who embrace them are the ones who will be successful in the new health care system.”