Briefly Summarize The Compensation Plan That Has Been Developed By MGOA.plan was mainly aimed at improving performance among the doctors. It would also establish a relationship between the doctor’s financial performance and their pay (Barro, J et al, 2005). The main components of the plan include; doctor’s base salary, development fund tax, bonus and adjustment of the salary which is depended on their financial performance. Physicians The new compensation base salary which was supposed to be set at the beginning of every
six month period. The salary base was supposed to be at the levels set in 1999. This was depended on whether or not the 1999 levels aligned to the department revenues which each doctor is supposed to contribute (Barro, J et al, 2005). When the base salary was set, each doctor would receive their regular monthly salary. Development fund tax in which each doctor’s collection was supposed to be taxed at 5% to help in development fund (Barro, J et al, 2005). These funds were used to fund activities like research and reimburse those doctors who had attended to a high number of poorly insured patients.
Bonus was supposed to be given at each end of six months. The bonus was to be 50% of the profits from his/her work (Barro, J et al, 2005). However, this rate was to be reviewed at each period. This was depended on the group or department since when the bonus is likely to bring a loss to the group; the rate of compensation was to be lowered. Each physician was supposed to be responsible his/her own costs. Values used to calculate the bonus include; revenue generated by physician after the development, costs generated by physicians’ activity, physicians’ base salary and the bonus rate (Barro, J et al, 2005). Adjustment of the base salary is supposed to be done at every review period. The adjustments can lead to an increment or a decrease depending on the performance of the doctor. For doctors who received bonuses in any previous periods, the salary increase will be by half the bonus amount.
Analyze Strengths and Challenges Related To This Plan, and Propose Potential Modifications That Could Address Issues or Concerns Associated With This Plan
The new compensation plan has some strength because it is motivating physicians to work hard. The bonus included in the plan will motivate doctors to work since it is depended on the performance of the particular doctor. The other strength is based on the fact that the level of deficit reduced since doctors are supposed to bring profit in their performance (Barro, J et al, 2005). Salary is adjusted depending on the performance. Hence doctors work hard in order to gain a pay rise. The financial debt which MGOA was facing will be reduced through this compensation plan. The other strength is that doctors who see a high number of poorly insured patients were to be compensated.
However, this plan has its own challenges. The first challenge is that some hard working doctors who generate a lot of profit may not get any bonus because their group has deficit. There was another challenge when it came to collection of funds (Barro, J et al, 2005). There was an argument on whether or not the collection should be on one centralized department or not. Some staff was proposing for each of them to have their own assistants to have their collection (Barro, J et al, 2005). Another challenge was whether or not research should be financed or not.
There are some modifications which can be done on this compensation plan to make it more appropriate. Compensations should be based on individual performance not on group performance. Those doctors who have been in practice for long but are bringing losses should be dismissed. It is important to finance research since it brings out important information (Barro, J et al, 2005).
Explain How Elements Of This Plan Might Be Applied For Non-Physician Employees, Noting Differences Between Various Compensation Systems.
The elements in this plan can be applied for non physician employees in that their basic salary can be set depending on their performance. Their salaries can also be taxed in order to generate money required for development to improve their working environment (Barro, J et al, 2005). The high performing employees can get a bonus depending on their performance. Adjustment of their salaries can also be done depending on the performance of each employee.
References
Barro, J et al. (2005). Performance Pay for MGOA Physicians (A). Boston, Harvard Business Publishing