Faculty compensation at academic medical centers is rarely straightforward.
Attempts to balance clinical productivity, research commitments, teaching loads and recognition of academic rank across departments that operate autonomously can undermine equity and create financial risk.
Explore how a large academic medical center partnered with SullivanCotter to redesign its faculty compensation model, standardize work effort expectations, and build a transparent incentive structure that rewards productivity while supporting long-term institutional health.
Challenges
- Low clinical FTE allocation relative to research funding
- Low aggregate productivity with more than 60% of faculty physicians falling below the market median
- Lack of standardization across practices – including billing, compensation, denial management, and use of shared services differed across practices.
- Variation in faculty compensation models and benchmarking methodology
- Autonomous department oversight resulting in inconsistent work effort expectations, definitions, and recognition of academic rank
- Lack of a transparent clinical incentive structure disenfranchised many physicians from optimizing productivity-based incentive opportunities
Approach
- Key stakeholder interviews to understand goals, challenges, and culture of the organization
- Market assessment to support greater alignment of pay with productivity and understand the impact of rank and cFTE benchmarking results
- Work effort review to compare current practices to the market and identify opportunities for improvement
- Revised incentive design to provide transparent and equitable opportunities to earn additional compensation
- Partnership with Department Chairs to build a coalition of champions who support the need for change
Outcomes
Increased Productivity
- Physicians producing below the market median fell from 60% down to 46%.
- Performance expectations and incentive parameters communicated at the outset of each plan year encouraged physicians to increase clinical productivity levels through a clear understanding of how this would impact compensation
Standardized Work Effort
- Development of standard FTE definitions and allocations to replace outdated legacy structures improved clarity of expectations
- Evaluating and understanding these disparities created common accountabilities towards both departmental and enterprise success and financial sustainability
Recalibrated Clinical Salaries
- Improved consistency in compensation structure and accountability
- Separating base salary into clinical and non-clinical components promoted more consistent and affordable recognition of academic rank and created the opportunity for meaningful increases in clinical compensation
