Performance Pay for Massachusetts
General Orthopaedic Association
Christopher J. Tukiendorf
March 17, 2014
Performance Pay for MGOA Physicians
Key Problems Faced by MGOA
I believe that there are three key problems that the Massachusetts General Orthopaedic Associated (MGOA) faced when Dr. Harry Rubash and Dr. James Herndon arrived to help remedy the association’s financial situation. The first of the three issues was the financial problem that MGOA was faced with. Over time MGOA had not addressed the issues of receiving fewer monies from private and governmental insurers and that amount had now grown to a staggering $1 million dollars that the orthopaedic ...view middle of the document...
In addition, Dr. Rubash wanted to address the issue that 25% to 30% of the physicians were contributing substantially to the overall association, 25% to 30% of the physicians were contributing negatively to the association and the remaining 40% to 50% of the physicians were covering their expenses but were basically breaking even. Rubash really wanted to reward those physicians who were bringing in the large contributions and have those physicians who were lacking in contributions improve if MGOA was to become financially sound.
The Compensation Plan
Dr. Herndon and Dr. Rubash knew that they really need to increase productivity with most of their physicians and to do so they needed to motivate the doctors. The strategy that they came up with was to create a direct link between the doctor’s performance and his/her pay. The components of the new compensation plan included the physician’s base salary, a development fund tax, a bonus and then finally an adjustment to the physician’s next 6 month base salary.
Each physician’s base salary was set for six months and Rubash decided to set each doctor’s current salary based off of the market trends of 1999. Next, the development fund tax was designed to collect 5% of each physician’s incoming revenue and that amount would be available for research and other activities that MGOA participated in because it was part of the Harvard Medical School. In addition the fund would also reimburse some of the physicians that received a greater number of poorly-insured patients than other physicians. This was an important part of the compensation plan because MGOA had to become self-sufficient and not rely on funds from the hospital. The next part of the compensation plan was the bonus. At the end of the sixth month window, each physician would...