Tell the truth; does this sound familiar? Every year at Christmas time you make a decision to provide a bonus to your employees. You check with your accountant or office manager to see what you gave last year and you increase the amount from 5-15% depending on the profitability of the practice. Employees learn to expect the bonus and employers cringe when they give out a bonus without any increase in productivity or profitability of the practice. This scenario is all too familiar to most of us. What is the solution? We can both keep the status quo and begrudgingly continue with the December bonus as we have in the past, we can stop the bonus program and hunker down because the morale of the staff will certainly deteriorate, we can use non-monetary motivators (another article) or we can implement a bonus plan based on incentives and productivity. According to Polly Walgren, Practice Administrator of a busy surgical practice in the greater Chicago area the incentive bonus plan is truly a win for the employees and a win for the employer. Also, this plan ultimately improves patient satisfaction and leads to positive word of mouth marketing for your practice.
What to do?
There are three possible approaches to the bonus problem:
1) Continue the status quo
2) Eliminate bonuses altogether
3) Change the current method to combine monetary and non-monetary rewards
Continuing the status quo is, for most practices, not a reasonable solution. The problems continue and, in fact, will continue to escalate each year. Eliminating bonuses would be easy, but this would create more controversy than continuing the current system. Ultimately most physicians are committed to rewarding their employees in some fashion. If the objective of an employee bonus is recognition and motivation, non-monetary plus monetary rewards can be very effective.
The best approach according to Ms. Walgren is to turn a bonus into an incentive. You will find that employees will work harder to achieve a bonus when they know that the bonus is tied into reaching goals and objectives than when the bonus is merely given to them for showing up day in and day out and doing only what is required in the job description or employee manual. Ms. Walgren suggests setting quarterly goals for the practice and giving quarterly monetary rewards for reaching the goals. This is best accomplished by notifying employees about changes in the bonus structure and asking for their involvement in setting goals.
Implementing a solution
Ms. Walgren suggests sending a letter to the staff explaining the change in the bonus structure, describing the monetary parts of the plan and inviting input. Most of your staff can be expected to react to the communication positively and began talking about goals and suggestions. The next step is to hold a staff meeting on the rewards topic to resolve any misunderstandings.
The monetary bonus
Using the information from Medical Group Management Association (MGMA) and the office managers’ survey, doctors can establish a monetary incentive such as one week’s pay distributed as a yearly amount; one-fourth distributed each quarter. With input from employees, you can develop your own quarterly performance goals such as:
Quarter 1: A dollar amount for collections.
Quarter 2: Collecting co-pays at the time of each visit thus reducing your billing expenses
Quarter 3: Number of surgeries performed or reimbursement for profitable office procedures, i.e., minimally invasive procedures for BPH
Quarter 4: Combination of the first three goals.
At the end of each quarter, Ms. Walgren suggests that managers report the results to the staff. If the goals are achieved, the practice issues checks at the beginning of the next quarter for the previous quarter. I suggest that you give the last quarter bonus right after Thanksgiving so that your staff can use the money for their holiday spending.
Success of the new system
Ms. Walgren believes that this bonus/incentive structure will be successful in several ways. First you change the long-standing plan of automatic annual holiday bonuses with minimal dissention from the employees as the employees are involved from the very beginning and have a “buy in” as it is their program and they have agreed to the goals and the objectives. You can expect your staff members to make excellent suggestions and discuss new goals among themselves in preparation for future quarters.
It is imperative to warn the employees of the inappropriateness of discussing bonus amounts with fellow employees. You will find that you can eliminate much of the disgruntlement by standardizing the bonus amount and tying it to each person’s compensation level.
Ms. Walgren reports that most physicians expressed satisfaction with the results of reaching new practice goals. Just setting goals focuses employees’ attention on critical areas of the practice and/or individual performance of job duties. Although goals change each quarter, employees continue to respond to previous quarters’ goals.
Tips for getting started
A practice that decides to implement a bonus or incentive plan needs to:
*Plan carefully;
*Communicate it clearly;
*Ensure measurable objectives; and
*Involve staff in the planning process.
While these may seem easy and obvious, each one can be difficult to accomplish. The climate of the organization, the attitudes of the employees and the commitment of the physicians to reward staff play key roles.
Careful planning of the bonus program may prevent having to change it in the future. Better to implement a plan in slow, carefully developed steps, considering future growth of the practice, than to try to change what has already been established.
Clear communication with employees is essential. They need to understand how the plan works, when it becomes effective and what period of time it covers. E-mail is fine for brief, back-and-forth messages, but if significant concern arises, a group meeting is the most effective way to communicate and reach resolution.
Setting objectives may be difficult. It is important to work hard to develop goals that involve every employee. You may consider separate goals for each department. Don’t forget the need to objectively measure progress toward goals – in hard numbers. Choose objective goals which can be quantified; subjective goals present measurement problems and can spark disagreements over whether or not they were accomplished.
You can anticipate great value in involving employees in the planning process for the bonus/incentive plan. This can be accomplished either informally or formally through committees and staff meetings. Any plan is more likely to succeed when employees have an input into the process.
For most practices the greatest overhead expense is non-physician staff salaries. You certainly don’t want to improve your own bottom line at the expense of your staff. However, if production increases and profitability is also increased, you will want to pass part of this windfall to your staff. An incentive\bonus plan is one of the best ways to accomplish both objectives. And satisfied staff members are much more likely to satisfy patients and speak well of your practice to outsiders.
Polly Walgren, MBA, FACMPE
Midwest Orthopaedic and Neurosurgical Specialists, S.C.
2111 Midlands Ct
Sycamore, IL 60178
Phone: 815-758-7481
Fax: 815-756-7130
Email: pwaglren@earthlink.net
