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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