Productivity-based compensations versus incentive plans.

Amr E. Abouleish, MD, MBA Because many factors can affect anesthesiologists’ billings and productivity, but are not necessarily under the individual anesthesiologist’s control, many anesthesiology groups, both academic and privatepractice, have chosen to use shifts-worked (i.e., availability) as a measure of clinical work done. Many private-practice groups simply assume all the partners work the same number shifts, calls, and take the same amount of time off and, hence, split the revenue equally. External pressures (e.g., hospital contracts requiring incentives, medical school requiring a productivity system) and internal pressures (e.g., older partners reducing workload, merging of two groups, covering several facilities) drive groups to develop productivity measurement systems. For private-practice groups, these systems are almost all clinical-productivity based. But for academic departments, the clinical productivity payments should be balanced with nonclinical (teaching, research, administrative) productivity payments. For academic departments, there has not been much published on how to create a system and the impact of the system. Unfortunately, in this area, there will never be a definitive study because of the nature of the issue. One groups’ compensation plan cannot be said to be better or worse than another groups’. The real issue is if the compensation plan makes the group successful. Therefore, when it comes to studies about one’s individual productivity compensation plan, the n will always equal 1 and reports will always be case reports. When talking about individual productivity, one does not compare two individuals from different groups, but only compares individuals within the group. However, this does not mean that case reports cannot be helpful. In contrast, these reports will be very helpful in educating on the process of developing the system, implementing, and impact on the department and individuals. They also help us learn about unexpected consequences. In this month’s issue of Anesthesia & Analgesia, Reich et al. reports on their productivity-based compensation plan. Before proceeding, I must address why I have referred to the case report as a report on “productivity-based compensation plan” and not as an “incentive plan. ” It is important to understand the difference between these terms. Accompanying our survey study on incentive plans, two very different editorials by Dr. Ronald Miller and Dr. David Lubarsky were also published. Dr. Miller championed systems where compensation was based on productivity measurements and that these systems would increase productivity, while Dr. Lubarsky cautioned that if one incentivized all activities, one would not incentivize anything. In reflection, both are correct. An essential element of an incentive plan is that one does not incentivize all activities being done, but only activities that one would not normally do. Hence, the incentive should be less than the majority of the compensation (e.g., 20%), with the rest of the compensation being a base salary. Hence, the variable payments in an incentive plan are focused only on activities that would not be done without an extra payment. In contrast, a productivity-based compensation plan focuses a majority of compensation to be variable and encompasses a larger amount of activities. In developing a new productivity-based system, all activities being done that align with the department’s mission would be included, valued, measured, From the Department of Anesthesiology, University of Texas Medical Branch, Galveston, Texas. Accepted for publication August 8, 2008. Address correspondence and reprint request reprints to Amr E. Abouleish, MD, MBA, Department of Anesthesiology, Rt 0591, UTMB, Galveston, TX 77555-0591. Address e-mail to aaboulei@utmb.edu. Copyright © 2008 International Anesthesia Research Society