Case study examines how to incorporate academic missions into a compensation plan

When Robert Hromas, MD, MS, began working at University of Florida Health seven years ago, he heard a gripe that is likely echoed in academic medical centers across the country.

“A large number of junior faculty came into my office when I first got here and complained that, ‘I’m killing myself in the clinic doing research, and there are a few famous senior faculty who are doing a quarter of the amount of work I’m doing but being paid two or three times as much, so I’m gonna leave,’” said Hromas, a professor and chair for University of Florida’s Department of Medicine.

To address this complaint, Hromas enlisted a committee of three junior faculty, three senior faculty and three division chiefs to overhaul the department’s compensation plan. In addition to being fair to both junior and senior professors, the plan needed to serve the department’s academic missions for research and education and be self-funding within each of those missions.

Hromas and colleagues reported in Academic Medicine the transition has been largely successful. A survey administered at the end of the plan’s third year showed 61 percent of faculty preferred the new model to the old one. And when comparing the year before the plan was implemented to year three of the new plan, clinical relative value units (RVUs) per faculty increased 7 percent, incentives paid per faculty member increased 250 percent and publications per faculty increased 15 percent. Grant submissions, external funding and teaching hours also increased but didn’t reach statistical significance.

“The point of the paper was we could create a compensation plan that aligned compensation with productivity and yet not harm the academic mission of education or research,” Hromas said. “We got just as many grants, or more grants. We published just as many papers, or more papers. And we had just as many teaching hours, or even more teaching hours.”

Background

While RVU-based productivity incentives have been part of academic medical centers’ compensation plans for the last two decades, they often create competition between clinical work versus conducting research or teaching students.

“The academic missions of research and education are not reimbursed to the same extent as clinical productivity is, so there is definitely tension between the academic mission—research and education—and the third leg of the stool in academic medicine, which is clinical care,” Hromas said.

Some compensation plans have used pooled income from the clinic to fund research or education incentives, but these comprehensive approaches “can place clinicians in opposition to educators and investigators, decreasing clinical productivity and harming clinical faculty recruitment and retention,” Hromas and colleagues wrote.

This observation led to “self-funding in each academic mission” becoming one of the seven organizational principles of the department’s plan. Hromas said it took the committee several months and three attempts to conceptualize a model that checked off all the principles, which also included equity, compensation coupled to productivity, authority aligned with responsibility, respect for all academic missions, transparency and professionalism.

How they did it

The compensation plan used national averages to provide benchmarks for each faculty member’s starting salary and target productivity levels. Rank and specialty were considered.

“A full professor obviously has a higher benchmark than an assistant professor, so that’s why we were able to win over the full professors,” Hromas said. “The assistant professors were OK with it because their targets were equivalent. They weren’t working three times as hard to support a full professor.”

Some junior faculty could increase their salaries by exceeding their target RVUs, Hromas said. Incentives were paid out at roughly one-third of net profits generated by RVU levels over the target amount. In the 2012 fiscal year, the year before the plan was implemented, each faculty member earned an average of $3,191 in incentives. In 2015, the average faculty member earned $11,153 in incentives.

To ensure academic goals didn’t take a backseat, the compensation committee translated all education and research efforts into RVU equivalents. In other words, a faculty member could earn additional RVUs (and eventually, incentives) by training more students or residents, or by obtaining research grants or contracts for the university.

“People were able to immediately correlate an activity with a reward, and that’s important,” Hromas said.

Also, the plan empowered the faculty to increase their base salary by half of their incentive total from the previous year. As base salary increased, RVU targets concurrently increased.

If faculty fell more than 6 percent below their RVU target, they would see a reduction in base salary.

“It allows someone to adjust their salary depending on how hard they want to work,” Hromas said, while also making the salaries both self-funding and self-correcting within the plan.

Six people (3 percent) encountered negative salary adjustments after one year in the program. Two of those people retired, Hromas said, while two of the remaining four have since increased their salary back to the previous level by exceeding RVU targets in subsequent years.

After one year in the program, 67 percent of eligible faculty—85 members— accepted a base salary increase, along with the increased responsibility for productivity. After year three, 53 of 96 eligible faculty accepted a salary increase.

Next steps

After some initial struggles, Hromas is pleased with the way the compensation plan is being received.

Even though about one-third of the faculty prefers the old payment model, he understands it’s impossible to garner 100 percent satisfaction.

“We feel like if we’re pleasing everybody, then there’s not really any stretch goals and we’re not going to grow,” he said.

Hromas attributes some of the popularity of the program to the committee that designed it. Having a “bottom-up” plan, rather than one implemented by university leaders, is more likely to garner support, he said. The Medical University of South Carolina, in contrast, experienced a near mutiny this summer when it implemented an RVU-based model from the top down.

The next hurdle is incorporating quality metrics into the compensation plan. This has proven difficult, Hromas said, because of vast differences in medical facilities.

“Some people practice in a palace and some people practice in a 50-year-old building. That’s really been difficult to get our hands around—what’s the role of infrastructure in patient satisfaction, on time to pain medication, on length of stay,” he said.

The department has installed a Master Clinician Awards program, based on peer nomination and voting, that offers cash awards to five clinicians per year based on quality. But Hromas said he would eventually like to have more defined quality measures tied to financial incentives.