Fall 2006 issue of Horizons

INDUSTRY HEALTH CARE Life Cycle of a Health Care Practice

Part 2 - The Best Compensation System

Dan Bindler, CPA

This article is the second in a series of three dealing with the life cycle of a health care career. Every health care profes- sional must decide if it is better to open a practice or work for an existing practice. After that decision is made, the solo doc- tor must decide if and when to bring in “The New Doctor.” Once the practice has more than one doctor, it must create the “The Best Compensation System.” Eventually every prac- tice must face the fact that the mature doctor may want “To Retire Or Cut Back.” The complete series is available at http://www.rubinbrown.com.

to have some frank discussions to identify those factors in the system that are most irritating to your professional staff. We generally don't recommend changing the systems mid- stream, but if the process of closing the year and the deter- mination of year-end bonuses was difficult, now is the best time to address the issue. Some address the issue with a meeting, while others ask the professional members to respond to a survey, after which an open discussion meeting is held.

We frequently are asked, “What is the best compensation system for our practice?”

“The Best,” “The Most Fair” and “The Most Equitable” are all terms we hear. The best answer we can give you is as fol- lows:

• The system must be transparent, easily understood and accepted by the professional staff.

• The system needs to offer incentives to reward positive behavior, resulting in ethical application by the participants.

As revenues change, new doctors appear and others retire, we hear from groups that the system is no longer perceived as fair. Health care compensation systems cannot remain in place without paying attention to the changing world. Not addressing these changes may result in problems in the practice dynamics, potentially leading to the breakup of the practice. Many practices spend the end of the year disputing the allocation of the year-end bonus distributions. If this past December was especially difficult, now may be the best time

37 • summer 2006 issue