The Challenges of Fair Faculty Compensation Plans

November 2015

“Life is not fair”» DB Welling

It’s Complicated

Harvard Department of Otolaryngology– Beth Israel Deaconess– Boston Children’s Hospital– Brigham & Women’s Children– Massachusetts General Hospital– Massachusetts Eye and Ear Infirmary

• Downtown Academic Practices– MD, PhD, MD/PhD, etc

• Suburban Practices

Principles

• Transparency • Fiscal responsibility• Reward relevant activity

Practices

• New hires –Training, Experience, Research, Leadership,

Market - MGMA, AAMC guidelines

–Clinician/scientist 2-3 years salaried position• Time allocation 50 – 75% research

• Ongoing faculty–Citizenship –Clinical productivity less expenses–Harvard Ceilings – Incentives

Harvard CeilingsFaculty Compensation Guidelines

Academic Rank Maximums

The HMS limits for the academic year beginning July 1, 2014

AcademicRank

Academic Salary Maximum

Total DirectCompensation

Maximum

ProfessorAssociate ProfessorAssistant ProfessorInstructor

$320,500$246,600$219,600$184,600

$783,300$602,800$537,000$451,300

Incentives

• Some funds distributed department wide based upon contracting to make whole all members of the faculty

• Some funds return to doc’s who’s net income exceeds the Harvard cap– 50% to the department–50% to their research fund for academic use

• Substantial impetus for promotion– teaching, research, publication, clinical

innovation, leadership, national and international reputation, funding, etc

Track Productivity Through Cost Center Reporting (Revenue and Expenses)

• Revenue• Collections through clinical work• Departmental/Institutional support

• Expenses• Professional salaries and benefits• Support staff salaries and costs• Billing fees• Other clinical expenses related to

professional clinical activities• Contributions to the Chief’s Fund

Cash Flow - Physician Cost Center

Otolaryngology Ophthalmology

Individual Bonuses Determined by Department Chair using 50% of Surplus as a Guiding Factor

Net Receipts & Other Revenue

Less: Physician Base Salary

Less: Physician Benefits

7.5% of Net Receipts

Less: Billing, Fiscal, Practice Admin

Less: Other Operating Costs

Less: Contribution to Chief’s Fund

Net Practice SurplusAvailable for Incentive Compensation

Incentives

Less: Direct Support Costs

$5,000 Per Physician

Boston – 50% of Surplus Goes to Physician

Suburban Centers –90% of Surplus Goes to Physician

Remaining Surplus to Department

Note: Total Compensation Including Salary from Outside Sources is Capped at the Harvard Maximums for all Academic Faculty.

Departmental taxation

• $5,000/year • 50% of overage to department

• Overhead rate 28%-42%

Summary

Strengths• Productivity based• Academic incentives

– Harvard Cap– Overage used for

academic activity• Suburban centers

bring cases to MEEI• Hospital support• Development support• Great faculty!

Challenges• Declining dollars• Departmental support• Complex • Competition• Disparity throughout• Research and teaching

not well compensated• “Life’s not fair”

Thanks Dave and SUO