Performance Pay for MGOA Physicians

The Massachusetts General Orthopaedic Associates are a physician group within the MGH formahospital. MGH was the first hospital to provide orthopedic services in the country, and since its inception, MGOA has led the way in clinical care and research. Although their reputation for high level research and patient care was impeccable, MGOA faced serious financial deficiencies that put the future of the group in danger. The group was hemorrhaging money at a rate of hundreds of thousands of dollars per year. To help control and solve these financial woes, MGOA hired Dr. Harry Rubash and Dr. James Herndon. Because of their success with the orthopedics department at the University of Pittsburgh, MGOA was …show more content…

There is also a bonus given twice a year. This bonus is equal to 50% of profits generated by the physician (profits are calculated by revenue-costs incurred- base salary). However, if this bonus rate puts the group in the red for the period, it can be adjusted in order to ensure that no debt is incurred, but it can never be negative. In addition, all physicians have a share of general office costs added to their costs incurred for purposes of calculating profits. The final piece is the adjustment of base salary each 6-month period. If a doctor outperforms their salary and other costs, their base salary will be increased by half of the profit created. Those who underperform their cost to the group will be deducted the full value of that cost on their base salary. Lastly, this new system allows for research grant money to be counted towards a doctor’s revenues. This plan has various benefits. To begin, it solves many problems that the previous system created and sustained. Doctors are now responsible for their financial impact to the group; if they produce less money, they get less money. In addition to making less if they don’t product, doctors are rewarded when their contribution exceeds their cost. The incentives of doctors, and financial stability for the group are now aligned. Also, the development fund allows for some flexibility for doctors who