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Elements of Compensation for Potential Negotiation
Elements of Compensation for Potential Negotiation
Being appropriately compensated or recognized for individual contributions to an organization requires physicians to also understand the various components of compensation that could be negotiated and how compensation is typically derived for similarly situated physicians. This section will overview physician compensation and how it is generally determined in different practice settings. The purpose of this section is to provide an array of compensation-related best practices so ID physicians can determine what formula is best for them. Please refer to the “Fundamentals of ID Physician Compensation” webinar for additional details.
Importantly, many physicians start their career (or start with a new employer) with an income guarantee (aka salary) then transition to a performance-based model after one or two years. In many cases, this can be advantageous for new physicians as they build their clinical practice. However, remaining on an income guarantee in the long term can result in underpayment relative to the activities performed.
A. ELEMENTS OF COMPENSATION
This section reviews the various elements of clinical compensation that a physician can consider when preparing for a negotiation (e.g., fixed, production based, quality based, value based) and unique differences in compensation methodologies across various practice settings (e.g., inpatient, ambulatory, mixed, other). Additionally, within each practice setting, this section provides information regarding different types of clinical practice and the compensation methodologies typically used among them.
The categories of compensation paid to a physician depend on the activities performed by the physician and should be aligned with an organization’s strategic and financial objectives. The following are the possible components of compensation:
• Fixed compensation is a base or guaranteed amount of compensation that is typically tied to minimum employment expectations;
• Production-based compensation is an at-risk portion of total compensation that is tied to measures of clinical productivity (e.g., wRVUs, collections, encounters) or payments for call coverage—see section III.B for a definition of wRVUs;
• Value-based compensation is a component of total compensation that is tied to measures of quality, outcomes, improved patient experience or reduced costs (paying for value over volume). IDSA will be releasing a Value-Based Arrangements Guide this spring, which will provide more information and guidance on this topic;
• Administrative stipends or payments are compensation for a medical director role or other administrative roles;
• Other payments include additional stipends for call, advanced practice provider supervision and/or nonclinical effort such as research, teaching or strategic effort as described in section II.A.