In order to ensure that a physician practice performs well financially and operationally, one aspect that must be considered is the compensation methodology chosen to pay the physician. This methodology could be based on financial factors such as revenue or net income produced. Alternatively, the model could be based on productivity or quality/patient satisfaction of some combination of the above. This following assignment will involve you taking a closer look at these methodologies and determining which you believe is best among the choices given. Although there is not necessarily one correct answer, finding the methodology that fits best for the physicians is very important in ensuring best or desired performance by the physician.

case briefing in which you answer the following questions:

1. Review physician compensation under each of the four compensation systems described above. Briefly describe to a colleague unfamiliar with these methods how each works.

2. Identify the strengths and weaknesses of each model.

3. Recommend the system that you believe is best for Bangor Family Physicians. In addition, discuss why managing a physician practice and maintaining the appropriate amount of productivity can be a significant challenge for any organization or group of individuals.

*** I need #3 - the recommendation. I have an idea but want validation.

CASE 11 8308 Instructor Version Copyright 2006 by FACHE BANGOR FAMILY PHYSICIANS Pay for Performance This case requires the development of a physician compensation scheme for a four-physician family practice. The model uses historical data for inputs along with information regarding the amount and type of compensation to be based on performance and how performance is measured The model consists of a complete "base case" analysis-no changes need to be made to the existing MODEL-GENERATED DATA section. However, some values in the student version INPUT DATA section have been replaced with zeros. Thus, students must determine the appropriate input value and enter them into the cells colored red. When this is done, any error cells will be corrected and the base case solution will appear. Note that the model does not contain any risk analyses, so students will have to create their own if required by the case. Furthermore, students must create their own graphics (charts) as needed to present their results. INPUT DATA: KEY OUTPUT ompensationi Total amount in base pay Based On Total Total amount in performance pln300 0 veu $177 509 $174010 $177 443 $191,039 $720.000 i,Net revenue $177,509 $174,010 $177,443 $191,039 S720.000 0,000 . 14) . Work RWt # 174,436 180,208 186,457 178,899 720 000 Net income # 179,620.,165.304 , 170,005 205,071 720,000 Mult. factors 180,929192865174 817171388 120000 Total amount in profit distribution i $720,000 Multiple Factor Distribution Percentage based on financial performance Percentage based on noneconomic factors Multiple factors plan includes non-economic factors plus work RVUs Historicai Physician Data Physician Identifier D Total 15,800 4,967 20,164 6,742 27.256 $527,820 $535,841 $602,675 $576,312 $2,242,648 $422,256 $401,881 $421,872 $501,050 $1,747,059 $522,388 $298,351 $136,257 $78,892 600,000 Notes: (1) The RVUs listed are work RVUs, which are only one of the three component RVUs used in Medicare physician reimbursement (2) Over the past five years, the average annual amount reinvested in the preactice was S80,000. (3) In 2005, each physician 4,667 6,255 5,475 7,287 6,972 Professional procedures Gross charges Net collections Total support staff cost Total facilities costs Total supplies cost Revenue reinvested in practice Physician base compensation eceived a bonus of approximately $28,000 Historical Support Staff Data Number of Total Compensation Practice Manager Medical assistants Billing clerk Laboratory technician Other costs Total 48,652 175,264 52,615 62,165 46,788 61,736 Non-Economic Data Total Average patient satisfaction score Number of committee meetings Continuing education credits Professional assn. leadership 87 12 15 40 12 2 10 18 CASE 11 8308 Instructor Version Copyright 2006 by FACHE BANGOR FAMILY PHYSICIANS Pay for Performance This case requires the development of a physician compensation scheme for a four-physician family practice. The model uses historical data for inputs along with information regarding the amount and type of compensation to be based on performance and how performance is measured The model consists of a complete "base case" analysis-no changes need to be made to the existing MODEL-GENERATED DATA section. However, some values in the student version INPUT DATA section have been replaced with zeros. Thus, students must determine the appropriate input value and enter them into the cells colored red. When this is done, any error cells will be corrected and the base case solution will appear. Note that the model does not contain any risk analyses, so students will have to create their own if required by the case. Furthermore, students must create their own graphics (charts) as needed to present their results. INPUT DATA: KEY OUTPUT ompensationi Total amount in base pay Based On Total Total amount in performance pln300 0 veu $177 509 $174010 $177 443 $191,039 $720.000 i,Net revenue $177,509 $174,010 $177,443 $191,039 S720.000 0,000 . 14) . Work RWt # 174,436 180,208 186,457 178,899 720 000 Net income # 179,620.,165.304 , 170,005 205,071 720,000 Mult. factors 180,929192865174 817171388 120000 Total amount in profit distribution i $720,000 Multiple Factor Distribution Percentage based on financial performance Percentage based on noneconomic factors Multiple factors plan includes non-economic factors plus work RVUs Historicai Physician Data Physician Identifier D Total 15,800 4,967 20,164 6,742 27.256 $527,820 $535,841 $602,675 $576,312 $2,242,648 $422,256 $401,881 $421,872 $501,050 $1,747,059 $522,388 $298,351 $136,257 $78,892 600,000 Notes: (1) The RVUs listed are work RVUs, which are only one of the three component RVUs used in Medicare physician reimbursement (2) Over the past five years, the average annual amount reinvested in the preactice was S80,000. (3) In 2005, each physician 4,667 6,255 5,475 7,287 6,972 Professional procedures Gross charges Net collections Total support staff cost Total facilities costs Total supplies cost Revenue reinvested in practice Physician base compensation eceived a bonus of approximately $28,000 Historical Support Staff Data Number of Total Compensation Practice Manager Medical assistants Billing clerk Laboratory technician Other costs Total 48,652 175,264 52,615 62,165 46,788 61,736 Non-Economic Data Total Average patient satisfaction score Number of committee meetings Continuing education credits Professional assn. leadership 87 12 15 40 12 2 10 18