Healthcare Providers

Physician Compensation

Over the past decade, Navigant’s professionals have helped more than 200 physician organizations design and develop compensation and incentive plans that support those organizations’ strategic goals and objectives. These physician organizations include independent, health system-owned and HMO-owned multi-specialty groups and single specialty and academic faculty plan practices.

No single income distribution formula will fit all physician organizations. However, what makes a compensation plan successful is the level of support it receives from the physicians involved.

Any compensation plan must align physicians’ performance with the organization’s strategic business goals, mission and vision. Achieving this alignment is likely to become more challenging as the market continues to move toward reimbursements based on demonstrated value (e.g., clinical outcomes, service, etc.) and efficiency rather than just productivity.

When Navigant develops physician compensation plans, there is a clear link between pay and physicians’ contribution to the organization (clinical, teaching, research and medical administrative services) regardless of the specific measurements used to quantify that contribution.

We model our plans against historic performance to accurately estimate the ultimate financial impact these plans are likely to have on the organization and its physicians.

Our compensation plans involve:

  • Traditional income distribution planning
  • Alternative private and integrated physician practice compensation plan development
  • Physician productivity assessment and benchmarking
  • Physician executive compensation planning
  • Work standards assessment and development
  • Performance evaluation and improvement
  • Education and consensus building
  • Compensation assessments based on reasonable fair market value (FMV)

The following three factors make Navigant uniquely suited to meet healthcare organizations’ compensation planning needs:

  • Nationally recognized experts who are invited to discuss physician compensation at meetings of physician specialty professional associations, Medical Group Management Association (MGMA), American Medical Group Association (AMGA), Healthcare Finance Management Association (HFMA) and other related educational seminars
  • Extensive national and regional compensation planning experience with independent physician practices and hospital-affiliated group practices
  • Thorough understanding of issues facing physician practices, including the importance of a well thought-out governance structure, alignment of incentives across the organization, efficient overhead use, and physician compensation plans
  • Physician Strategy Services

    Expert Guidance



Physician Compensation Redesign for a Hospital-Owned Medical Group

A hospital-owned, multispecialty group was growing significantly and seeing a wide variance in physician productivity and motivation levels. Furthermore, many of the physicians had research and/or administrative responsibilities in addition to significant clinical roles. The hospital wanted to evaluate alternate compensation designs that would emphasize the mission of the hospital system and enhance the physicians’ contribution to the organization. 

Navigant recommends significant physician input during the compensation redesign process. Our team assisted the client with all aspects of a compensation redesign process, including assessing the goals and objectives of the group, interviewing the physicians and key administrative staff creating alternate compensation models for consideration and facilitating the selection of a revised compensation system. After evaluating the group’s culture, and a significant quantitative analysis, Navigant recommended a salary and productivity model based on Work Relative Value Units and credited time for research and/or administrative responsibilities. In addition, the group created performance expectations that clearly communicated the requirements to earn base salary and engage the physician.

After approval from the board of directors, the group implemented the revised compensation model. The physicians appreciated the diligent process of addressing their concerns and have welcomed the opportunity to earn incentive compensation. The group has significant growth objectives for the next two years and is better positioned to provide attractive compensation, structured in a market-competitive manner, and aligned with the motivations of the group and employed physicians.

Learn more about our insights and perspectives on the healthcare industry.

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