Photo From Great Lake AdvisoryOriginally Posted On: https://greatlakesadvisory.com/performance-incentives-for-healthcare-professionals/
How do you measure your progress towards achieving your personal and professional goals? The first step is to write down your goals so that you can review your progress at a later date. The next step is to outline a road map to reach each goal. As the leader of your clinic, it is imperative to create an environment that empowers your employees and motivates your healthcare professionals and medical office staff members to put forth their best effort. The result of this simple exercise can lead to a profound impact on your medical practice.
Our client, Harmony Center ENT, operates an otolaryngology clinic in Macomb, MI. Harmony Center ENT developed an audiology center within the practice before our relationship. Still, net income and revenue from their ancillary revenue center were stagnant in the three years leading up to our project. The audiology center contributed a negligible profit to Harmony Center ENT’s net income. The audiologist was also not incentivized to pursue any initiatives to improve the operations going forward.
Without well-defined goals, the status-quo becomes the benchmark. As a result, employees do not engage in the operations. Healthcare professionals and medical office staff alike are complacent with achieving the status-quo without incentives. There is no motivation for the employee to operate differently. To effectively promote positive change within your medical practice, employees need accountability and empowerment to accomplish targets aligned with your clinic’s vision.
We analyzed the financials of Harmony Center ENT’s audiology center and determined an appropriate set of objectives: 15% revenue growth and 5% net income growth over the next twelve months. It is essential to create realistic benchmarks. Communicate to employees the importance of reaching this defined goal and how their ability to achieve this accomplishment will impact future performance evaluations.
The profitability of an audiology center is driven by hearing aid dispenses, audio supply expenses, and the audiologist’s compensation. After examining historical trends of the audiology center and the profit per unit of each hearing aid dispense, we identified a set of binaural and monaural hearing aid CPT codes eligible for the performance bonus. We aggregated the binaural CPT codes and established three tiers of goals. The structure of each tier represented 5%, 10%, and 15% growth over historical averages of the aggregated CPT codes. We then replicated the same methodology for monaural hearing aid CPT codes eligible for the performance bonus as well. Harmony Center ENT paid the bonus quarterly, and we reviewed the results with the audiologist following each quarter-end.
The new incentives resulted in a healthcare professional more engaged in the clinic’s operations. The audiologist was committed to achieving the established goals. We also empowered the audiologist to pursue additional opportunities to increase the profitability of the audiology center. We began the new compensation structure in January 2019, and a summary of the results is displayed below.
We were thrilled by the audiologist’s discipline and execution of her revenue targets. The more impressive achievement was the audiologist’s impact in reducing audio supply costs by 12.69% despite increasing revenue by 21.66%.
It is also vital to provide guidelines for your incentive-based performance system. The protocol should safeguard against a deterioration in the quality of care incentivized employees deliver to patients of your practice. Additionally, address the need to protect the practice’s integrity.
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