CHIRO BIZ QUIZ: How to boost productivity with bonuses

One of the best ways to obtain peak performance from chiropractic associates and medical physicians in your practice is to offer an incentive bonus based on productivity.

Chiropractic associates and medical doctors joining a group on a full-time basis may expect some form of incentive bonus, so be prepared to field questions when interviewing prospective employees.

Studies have shown that properly designed incentive bonuses do, in fact, increase productivity in professional group practices.

But what is the best way to measure productivity? The key is to structure the bonus so it will not reward performance of regular duties. (That is what a salary is for!) The bonus needs to reward performance above and beyond the regular duties and have goals attainable by a hard-working doctor.

BONUSING PARAMETERS

Fortunately, you do not need to reinvent the wheel, as certain basic principles for bonusing physicians are already in place. Consider these guidelines:

• Avoid measures that rely on gross charges. Gross charges do not always reflect actual collections. In addition, if the coding of visits is left up to the doctors, they might be tempted to up-code, which could lead to more denials, reviews, and a decrease in actual collections for those physicians that are upcoding.

• Do not base the productivity measure on actual patient encounters. Like gross charges, the measure “patient encounters” doesn’t accurately reflect what those encounters are worth, and may produce an incentive to spend so little time with each patient that your associates will be creating a negative impression on your patients.

Many medical groups use a system based on Medicare’s work RVUs (relative value units), which assigns a specific value to different billing codes. These can be compared to known norms.

For example: The median RVU for a general internist is around 4,000 year. However, in a practice in which reimbursements vary greatly from company to company for the same services, this system will be prone to the same inaccuracy as other systems not using actual collections.

• Do not base bonuses on volume. Federal and most state anti-kickback laws prohibit you from basing a bonus on the volume of a doctor’s referrals to the practice.

You should always discuss a prospective bonus structure with your healthcare attorney to avoid any illegalities.

• Base the bonus on gross collections. The best systems are those based on a percentage of the physician’s gross collections. This will be the most meaningful measure of what the doctor is actually producing for the practice.

Benchmarks are available to help decide on the correct percentage, and you can also consult with colleagues in your area to see what they are offering.

WHEN SHOULD THE BONUS KICK IN?

Standard measures are available for different specialties. One statistic used by medical groups is that the bonus begins when the physician’s collections reach two-and-a-half times his salary.

This number will depend on whether the base salary is high or low, compared with similar practices in your area.

If the salary is low, you may lower the threshold for the bonus to start when the doctor’s collections equal his salary.

If the base salary is high, you may want to set the threshold much higher. For solo chiropractors bringing on an associate, you may base the threshold on your own collections, such that the bonus begins when the associate’s collection equal 100 percent or some other multiple of yours.

USING PERCENTAGES

Another important point to note is that the percentage you use can vary according to the level of gross collections.

For example: You may offer a specific percentage for gross collections franging from $500,000 to $750,000 and a different percentage for collections more than $750,000.

Bonusing professional employees is both an art and a science. When done correctly it can dramatically increase revenue in your practice.

Be sure to consult your healthcare attorney, accountant, and practice management consultant for their input and expertise to create a bonus structure that works for you and your associate MDs and DCs.

Marc H. Sencer, MD, is the president and founder of MDs for DCs, which provides intensive one-on-one training, medical staffing, and ongoing practice management support to chiropractic integrated practices. He can be reached at 800-916-1462 or through the Web site, www.mdsfordcs.com.