The Massachusetts General Orthopedic Associates (MGOA) hired Dr. Harry Rubash as chief of orthopedics in 1999 to improve the financial status and economic sustainability of MGOA. After reviewing MGOA’s financial processes as well as the physician’s work inputs and outputs, Dr. Rubash introduced the new Pay for Performance (“P4P”) compensation plan.
The P4P Plan
Dr. Rubash’s P4P plan was developed to create a “direct link between a doctor’s financial performance and the doctor’s pay.” The P4P plan had four components: 1) the physician’s base salary; 2) a development tax fund; 3) a bonus system; and 4) a bi-annual review of each physician’s performance that impacted the future base salary. Under …show more content…
Their expectation now is to focus on profitable endeavors, which helps the financial stability of MGOA in the long run. The weakness is that this plan design conflicts with MGOA’s mission statement, which is “to provide the highest quality musculoskeletal patient care, teaching and research, with a dedication to service and a commitment to leadership.” The disconnect between the P4P plan and the MGOA mission statement was the result of Dr. Rubash undervaluing the importance of key aspects of MGOA’s mission – patient care, teaching, and medical research. Despite Dr. Rubash’s argument that “financial security will allow MGOA to achieve its mission,” this strategy requires physicians to focus on MGOA’s bottom line, resulting in MGOA’s decreased research reputation, quality of patient care, and attractiveness to future employees and …show more content…
Under the P4P plan, the reward was in the form of a bonus. At the end of every six-month period, MGOA would determine the bonus based on, “the physician’s revenues minus costs and salary, multiplied by the bonus rate.” For those physicians who had a positive amount remaining after the subtractions, MGOA had the discretion to reward the doctor up to 50% of the remaining profit. Doctors that did not generate profits above their costs would have their base salary reduced by the amount to cover the