Performance Pay for Mgoa Phsicians

9-904-028

REV: OCTOBER 31, 2005

JASON R. BARRO

KEVIN J. BOZIC

AARON M. G. ZIMMERMAN

Performance Pay for MGOA Physicians (A)

On a warm day in June of 1998, Dr. Harry Rubash stood in front of a bookshelf in his new office

arranging photographs of his family and former colleagues in Pittsburgh. He looked out his window

to the profusion of hospital buildings and tangled Boston streets below. It was a good picture, he

thought, of the problems that faced him in his new position at the Massachusetts General Hospital

(MGH). Dr. James Herndon, his former colleague at the hospital system of the University of

Pittsburgh, had brought him to MGH to take over as chief of orthopaedics at Massachusetts General

Orthopaedic Associates (MGOA). Herndon himself was new to MGH, having recently taken over as

chairman of Partners Orthopaedics.1 Rubash and Herndon faced the ominous challenge of restoring

the financial health of the ailing MGOA.

The Hospital’s History

In service since 1811, MGH was the third hospital founded in the United States and included the

first orthopaedic service in the country, founded in 1899 by Dr. Joel E. Goldthwait, a pioneer in the

field. The department had a long history of providing outstanding clinical care, in addition to making

significant contributions to medical research and teaching. It was an MGH doctor who first made the

discovery of a herniated disc. In fact, the annals of orthopaedic literature were filled with disorders

that bore the names of the MGH doctors who discovered them. The prestige of both MGH and the

orthopaedic department was well-deserved.

In 1998, the year Rubash and Herndon arrived, the 12 surgeons at MGOA performed over 2,000

surgeries (see Table A for the number of surgeries performed from 1997 to 1999).2 The range of

procedures performed covered everything from knee arthroscopy to hip replacements, to spinal

surgery. The group also had a history of providing services to a wide array of patients...