Mgoa Physicians Case Analysis

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MGOA Physicians Case Analysis

Summary of Case: “Massachusetts General Orthopedic Associates (MGOA), a specialized unit with Massachusetts General Hospital (MGH), is a prestigious medical organization with a mission of providing high quality patient care, research and teaching. Until quite recently, however, MGOA had been running annual financial deficits, which were “financed” by dipping into endowment and borrowings from MGH. With new leadership at both MGH and MGOA and some new management initiatives, the financial deficit was turned into a modest profit. For the longer term, however, Dr. Harry Rubash, head of MGH, and Dr. James Herndon, head of MGOA, have proposed a new physician compensation plan featuring a base salary, a development fund tax, a bonus, and periodic adjustments to base salary based on individual physician performance—in particular, the physician’s profitability for MGOA.” (Project Background)

Pay Strategy Plan: A new pay system is being proposed which is a goal orientated system based on a restructured mission from a research and teaching system to performance based system. The desired outcome would be that the physicians would control their own expenses resulting in both increased income and productivity. A baseline salary would be established (Table C of Case Study) which would enable a “Develop Fund” to be established. Recurring deficit costs could be reduced or eliminated. This fund would be used to offset costs related to additional research projects as well as, offsetting potential penalties for a physician who might have a higher than average number of poorly insured patients. Bonuses are tied to performance, which could be adjusted by management, with individual physicians controlling their own costs. (Case study pg. 10).

Summary of Findings The following major findings are presented for consideration

Finding 1: Organization Mission: Fundamental change in the mission of MGOA from a primarily research/teaching organization to a clinical organization presents a cultural shift for existing staff. While the basic mission state remains the same, the inclusion of the clause “financial security” provides management with a great deal of authority to arbitrarily change functions without consultation. Initial changes included increase operating room time by 10% possibly affecting “reserved research time” and elimination of administrative personnel.(case study)

Finding 2: Workload: Several sub-findings are: a) inequity between physician cost (research) versus salary (surgery). b) Increased workload for physicians @ 90-100 hrs per week over the standard 75 hours. c) Hours are incorrectly being charged as “clinical research” rather than through normal workweek with patients. d) Personal research projects are being done in addition to the organization projects. e) Tenure is a complicated system taking up to 20 years. (Case Study)

Finding 3. Missing Revenue. Areas where potential reimbursements for services provide by MGOA were not explored: a) MGOA provides teaching and training for Harvard Medical Students without reimbursement. b) 12 private physicians who have practicing rights but are not on staff make no contribution to the operating costs of MGOA but they realize benefits such as increase patients from MGOA. c) Heavy reliance on HMO and Workers Compensation rather than expanding Private paying patients. (case study)

Finding 4.Timetable and Implementation of Pay Plan. Management has no clear timetable for implementation of pay plan other than “the end of the fiscal 1999 is right around the corner ...end up where we started (case study pg 12).

Finding 5: Management Actions: a) Management did not officially inform the staff of the inclusion of “financial security as part of the mission statement b) Management implemented operating changes that impact work environment i.e., automated system was done without staff input, resulting in a moral issue.

Issues/Discussions. One of the most important issues is the fundamental change that the pay strategy represents is stated by Dr Jesse Jupiter of MGH stated, “encourages members to focus on clinical productivity in order to survive...it is the reality of the environment...” (pg9) (4). In using the Expectancy Theory to evaluate both the strengths and weakness of the pay plan, many of the findings may impact the physicians’ motivation and performance. In applying the 3 components of the Expectancy Theory of Motivation which are 1) Effort to Performance