07.21.2022

Build a magnetic compensation model to attract the best and brightest

Like a magnet, a solid compensation model draws top performers with the skills to build a motivated sales force, drive clinical performance to achieve better patient outcomes with fewer hospitalizations, and align business and care objectives.

Or so the fable goes.

In the harsh reality of The Great Resignation, a year in which the U.S. Bureau of Labor Statistics reports more than 4 million Americans are quitting their jobs each month and organizations are clamoring to fill vacancies top to bottom, solid may no longer be enough to snag effective leaders, dedicated clinicians or motivated sales staff.

Post–acute organizations are struggling to figure out how much they need to offer and how much they can afford to offer, especially with a proposed 4.2 pay cut looming for home health next year.

And many are seeing that the best route to shore up thinning margins without sacrificing quality is to offer top performers opportunities to earn moretying the actual amount to performance. It’s an idea that’s been around in various incarnations for some time on the sales side, but the idea of compensation tied to performance is still relatively new on the clinical front.

“We’re seeing an evolution of compensation models,” said Rob Simione, SimiTree Principal, SVP Consulting. “In the same way that care is becoming value based rather than volume based, compensation models are being set up to reward, recognize and encourage certain behaviors associated with value.”

Organizations stand to reap their own financial rewards from compensation models rewarding clinician performance, Simione said. Under home health’s new Value-Based Purchasing Program, agencies will see payment adjustments based on their total performance scores.

Rewarding clinicians for all the behaviors that lead to increased reimbursement is a smart move, according to Simione.

“Bonuses are being tied to outcomes and reduced hospitalizations, and we are seeing much more creativity in structure to enable organizations to financially incentivize organizational quality and productivity goals,” he said.

Incentivizing quality and productivity

SimiTree works with organizations of all sizes to develop competitive and effective compensation models, identifying considerations unique to the organization and developing a blueprint for implementation.

Demand is higher now than ever before for help with compensation models, Simione said, with clients asking for more creativity as old notions about compensation structure fall by the wayside.

“Our clients are really beginning to understand how imperative it is to focus on quality under value-based care models, and how they are going to need to change old ways of doing things to get there,” Simione said. “Outcomes already mattered, but under VBP they’re going to matter even more. So they’re highly interested in learning how they can increase quality without doing so at the expense of productivity."

“It’s a balancing act,” he said. “But with the right compensation model, there’s actually an opportunity to increase productivity.” Generally, organizations can expect to recoup costs associated with development of a new compensation model through ROI such as continuity of care due to staff retention, expectation of increased reimbursement under VBP and more, Simione said.

7 tips for comp model development

Simione offers the following advice to organizations looking to build magnetic compensation models.

  1. Start with a time study. Understanding productivity and setting realistic expectations is crucial to the development of a strong compensation model, and encourages staff buy in, Simione said. Be sure to account for differences such as an employee who drives 20-25 miles per day and an employee who drives 50.
  2. Don’t sacrifice productivity. In the current staffing shortage climate, it can be tempting to avoid setting the bar too high and driving away employees. Simione encourages organizations to be realistic but aim high. “In a high-performance environment, you can expect two things to happen,” he said. “First, your high performers are going to get better. And second, your low performers are going to get better, too. And just one visit per day out of both performers is going to add up, making a huge financial gain overall.”
  3. Don’t incentivize volume over value. Set incentives for completing documentation and good outcomes. Otherwise, Simione said, productivity will degenerate into a numbers game, with clinicians doing more visits but shirking documentation. “And you’ll be overutilizing,” Simione said.
  4. Build in scheduling flexibility. Employees value time off and scheduling flexibility more than ever. The more flexibility an organization offers, the more appealing it becomes to job candidates.
  5. Plan for a 3- to 6-month implementation. For better staff buy in, Simione recommends piloting a new compensation model through at least two payroll periods. Depending on the size of the organization, pilot programs may be recommended for multiple teams.
  6. Don’t make the new model overly complicated. Some organizations assign a complex battery of weights associated with visits, confusing employees and inviting distrust and disengagement, Simione said. He recommends keeping things simple.
  7. Don’t throw the clinical manager to the sharks. Since the implementation and ongoing execution of a new compensation model will fall to clinical managers at most organizations, Simione encourages agencies to provide adequate training to prepare and support the clinical manager. It’s also important to make certain clinical managers have the right data to be successful, he said.

SimiTree can help

The clinical and financial experts at SimiTree understand the challenges facing organizations as the labor shortage continues, regulatory demands increase, and reimbursement tightens.

Unsurpassed regulatory expertise and years of industry experience enhance SimiTree’s value to maximize financial performance and strengthen your organization. Whether you need a profitability analysis, a new compensation model or other assistance, use the form below to reach out to us and tell us how we can boost your performance.

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Let's work together to improve the health of your organization. At SimiTree, we balance financial expertise and clinical excellence to help our clients grow. How can we help you? Call us at 800.949.0388 or complete the form below.

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