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      Physician-Led, Professionally Managed

      Key Learnings from the Last Five Years of Provider Compensation
      January 27, 2025

      Healthcare continues to evolve, and with it, so do the expectations surrounding provider compensation. Striking the perfect balance between financial sustainability and meaningful incentives has never been more critical to achieving organizational success. Over the past five years, lessons learned across healthcare delivery organizations have underscored the importance of building strong governance practices, fostering ongoing provider engagement, and creating transparent compensation structures grounded in guiding principles.

      If you're a healthcare leader navigating these challenges, the following will provide actionable insights to build a solid foundation for your provider compensation program. Using a provider-led, professionally managed approach, here are the key components to consider.

      Develop (or Refine) Your Compensation Committee

      An educated and empowered compensation committee is the backbone of any successful provider compensation approach Whether your organization is large or small, with a straightforward or complex structure, the role of this committee cannot be understated. Beyond ensuring compliance and driving alignment, a well-structured compensation committee helps build trust and credibility among important stakeholders.

      Leading Practices for Compensation Committees: Bi-Annual Education Sessions

      • Clearly reflects your strategic priorities (e.g., value-based care, efficiency, and quality outcomes).

      • Establishes transparent mechanisms for compensation adjustments and incentives.

      Build a Compensation Playbook

      A well-structured and comprehensive compensation playbook is essential for organizations, empowering stakeholders with the knowledge to thrive under your compensation plan. 

      Leading Practices for a Compensation Playbook: 

      • Philosophy and Guiding Principles: Clearly articulate the organization's "why" for developing and implementing compensation structures. This includes defining the organization's approach to compensation and aligning with industry standards.

      • Definitions and Compliance Stipulations: Include policies that adhere to regulatory requirements, such as Fair Market Value (FMV) guidelines, to ensure compliance with laws and regulations governing compensation practices.

      • Role-Specific Models: Outline compensation models tailored to different specialties or roles within the organization. 

      • Performance Metrics: Incorporate key performance indicators (KPIs) and metrics that define performance expectations tied to base compensation and incentive programs. These metrics should be measurable, quantifiable, and aligned with organizational goals to drive performance and reward top performers.

      Overcommunicate for Transparency and Trust

      Provider compensation isn’t just about contract negotiations—it’s an ongoing discussion. Regular communication builds trust, reduces frustration, and empowers providers to support organizational goals . 

      Transparency and engagement are key to managing compensation plans effectively. Providers need clear details on how their pay is calculated, ways to improve performance, and alignment with organizational goals. 

      Key Topics to Engage Your Providers On:

      • Regulatory Changes: Regularly update providers on CMS changes, wRVU adjustments, and economic factors like the impact of G2211 code. 

      • Performance Benchmarks: Provide transparent performance insights to help providers understand where they excel and where they can improve. 

      • Value-Based Goals: Share group-wide results tied to value-based initiatives to align efforts toward mutual success. 

      • Compensation Plan Updates: Communicate new or updated compensation models early to reduce uncertainty. 

      • Quarterly Budget Updates: Keep providers informed about the organization's financial performance and its overall impact. 

      • Annual Professional Reviews: Offer a comprehensive evaluation to align individual goals with organizational objectives. 

      Frequent, purposeful communication ensures providers feel supported and aligned with the organization, making compensation plans a tool for empowerment rather than frustration.

      The Bottom Line

      Successful provider compensation strategies are not created overnight—they are crafted through a strong foundation of governance, continuous engagement, transparent communication, and thoughtful planning. By taking a provider-led, professionally managed approach, healthcare delivery organizations can create structures that align with organizational goals while fostering provider satisfaction and trust.

      Take the Next Step with Confidence

      At AMGA Consulting, we specialize in helping organizations develop, implement, and refine provider compensation plans tailored to unique organizational needs. Whether you are looking to set up a compensation committee, build a playbook, or adapt to new regulatory changes, we provide the expertise you can trust.

      Contact us today to learn how we can partner with you to craft a compensation plan that works for your providers—and your bottom line.