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How to Improve Staff Performance in a Medical Practice

January 11, 2017

Improve Staff Performance in a Medical PracticeIn an era when many practices are struggling just to clear a profit under ever-changing and ever-lower reimbursement paradigms, the idea of performance-based incentive pay may seem counter intuitive. If your practice has extra cash at the end of the year, there are many places you could choose to spend it — new medical equipment, updated office space, or even physician bonuses. But some medical practices are looking more closely at “spreading the wealth” with their employees through performance-based pay. Here’s a look at the pros and cons and how to implement an incentive program if it makes sense for your practice. 

The Advantages — and Potential Pitfalls — of Performance Pay

The best quality patient care at the lowest possible cost is the goal of any medical practice and performance pay can go a long way toward achieving it. 

  • Encourages a “we’re in this together” atmosphere among staff, which in turn makes it easier for them to go above and beyond when it comes to patient care. 
  • Creates a focus on innovation where everyone has a stake in coming up with new ways to improve efficiency and cut costs. 

On the other side of the equation, however, performance pay bonuses must be handled fairly and judiciously. It’s important to avoid any perceived conflicts and resentment between staff when certain team members feel their contributions aren’t valued as much as others in the group.

A performance pay plan can backfire if it is poorly conceived and implemented in a way that favors one group of staff members over another. It can also become a problem if bonuses aren’t consistent, for example, if the practice management decides arbitrarily to withhold performance pay in favor of a capital upgrade or other practice expense. 

A Framework for Performance Pay in a Medical Practice

If you are considering implementing a performance pay system, here are some guidelines to remember as you develop a framework for incentive pay. 

  • Identify a revenue threshold that must be achieved before any incentive bonuses will come into play. Some practices do this on a quarterly basis, some annually, but it’s important to let staff know that certain goals must be achieved before incentive pay is considered. 
  • Determine what percentage of excess revenue will be used for incentive pay and set up a framework to distribute it among staff. For example, providers may keep 50% to divide among themselves with the other 50% going to staff on an equal basis. Some use a seniority system to distribute bonuses. However you decide to award performance pay, it should be clearly communicated to the team in advance so everyone understands how their bonus check was calculated.

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  • Tie performance pay to measurable internal goals. To be eligible for a bonus, for example, billers would need to maintain a denial rate below 5%. Be sure that goals you set are objective and easy to track so staff aren’t unpleasantly surprised at bonus time. 
  • If the practice’s needs or priorities change unexpectedly during the year — unavoidable expenses, the need for additional staff perhaps — in a way that affects performance bonuses, it’s important to communicate these changes as soon as possible. The underlying objective behind performance pay is to foster improved teamwork to reach a shared goal, so you must be transparent when those goals or objectives change. 

Finally, be sure you are able to consistently adhere to your performance pay policy before you decide to implement one. It’s far more damaging to staff morale to take away a program after one or two quarters, or even a year, than it is to avoid starting one in the first place. Be sure you’re consistently hitting revenue benchmarks and have a handle on expenses so that you can reasonably expect to hit your goals on a regular basis. 

If you have questions about how to improve your top line revenue through improved billing and collections, contact M-Scribe today for a free consultation. 


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