Mgoa Physicians Case

Case Preparation Summary - Performance Pay for MGOA Physicians

Short-Cycle Summary

Who: Dr. Harry Rubash (chief of orthopaedics); Dr. James Herndon (chairman of Partners Orthopaedics); 12 MGOA surgeons; MGOA billing center employees

What: Dr. Rubash needs to lead the process of improving the financial position and sustainability of MGOA by properly incentivizing the MGOA employees.

Why: MGOA has been running annual deficits of several hundred thousand dollars a year for a long time. The endowment fund has been depleted. MGOA has had to borrow from the hospital in recent years to sustain operations. A few surgeons still incur negative financial surplus.

When: By the end of 1999, some improvement was made. Further improvement is needed immediately.

Long-Cycle Summary

Issues:

Basic: MGOA’s compensation plan is not incentivizing employees to improve the organizations’ financial sustainability as powerfully or quickly as hoped.

Immediate: By reviewing the compensation policies, Dr. Rubash needs to bridge the gap between MGOA’s current need for financial sustainability versus the incentives and motivations employees currently have to perform. This gap likely covers both surgeons and the billing staff.

Importance & Urgency: It appears the return to profitability in 1999 was not adequate to provide long-term sustainability. There is an immediate urgency to continue improving financial performance. Another year of losses could have extremely negative consequences as the endowment is depleted.

Case Data Analysis:

Causes and Effects:

Cause | Effect |

Each surgeon performs various surgery types (knee, hip, spinal, etc), requiring different amounts of time. | Number of surgeries will vary drastically. Number of surgeries performed is not a fair measure of efficiency across all surgeons. |

Generally, not all surgery types will be as lucrative as others. Surgeons do not have complete control over the costs associated with their...