Hospitalist compensation can be thought of as consisting of two components: the amount of total compensation, including all elements such as base salary and bonus (sometimes referred to collectively as total W-2 wages); and the method by which it is earned. Both the amount and method of hospitalist compensation have evolved significantly over the last 10 to 15 years. However, the attributes of a desirable compensation plan have remained unchanged.

Easy to Understand

Any compensation plan should be simple enough that the hospitalist can explain it from memory. Complicated formulas used as the basis for paying a quality bonus or end-of-year “profit distribution” are problematic if the hospitalists do not fully understand them. A significant value of a salary bonus is to influence and reward behavior, but if the method of calculating the bonus is hard to understand then it is likely to be much less effective in bringing about this change. Disputes and resentment may arise when a doctor has misunderstood the formula and anticipated a larger bonus than the one that was paid.

Easy to Defend in Public

Despite efforts to keep the details of a compensation plan private, it will nearly always become public information either through a member of the practice talking about it to others at the “home” hospital or elsewhere. Or it could become public during a malpractice suit. In either case, the practice should think carefully in advance whether it could lead to significant embarrassment. For example, a financial reward for hospitalists’ reducing length of stay could be seen as an incentive to send patients home so aggressively that some are sent home before they are ready. This could be very embarrassing and damaging information if it were made public.

Complies with All Laws and Regulations

The laws and regulations governing physician compensation and the financial relationships between doctors and hospitals or other entities are complex and always changing. It is important to ensure that any proposed compensation plan is reviewed by someone knowledgeable in these areas. Despite good intentions, it can be easy to inadvertently violate a legal requirement when designing a compensation plan.

Can Be Modified over Time

Even if a compensation plan seems perfect today, it is very likely that the practice will evolve within just a few years so that the plan is no longer a good match with current reality, and it may even cause problems and inhibit the ability of the practice to make necessary adjustments in scheduling and other areas. For example, compensating hospitalists at a set dollar amount per shift worked may be reasonable today, but it might not be long before the schedule will need to change so that some shifts are longer or shorter and no longer match the single shift rate in the compensation plan. Because big changes to a compensation plan are difficult and time consuming, a practice might decide to simply keep the compensation plan as it is and forgo making the needed scheduling changes. In this case, the compensation plan is an impediment to effective practice operations. Compensating hospitalists based on hours of work or productivity, though having problems of their own, will in many practices come closer to automatically adjusting to other changes such as scheduling adjustments and changes in patient volume.

Rewards Good Work

Ideally, a compensation plan should encourage and reward the performance and behaviors that the practice desires. This might mean that a portion of total compensation is tied to the doctor’s citizenship in the practice, or to performance on quality measures or other domains. The amount of money at stake, and the thresholds that trigger payment to the doctor must be planned carefully to ensure that they influence behavior and are not seen as too easy or too difficult to reach.

The amount of total hospitalist salary, including salary and bonus or incentive payments, has been rising steadily since the Society of Hospital Medicine1 (SHM) first began collecting data in 1997. Some of this increase can be explained by increases in salary to keep up with inflation. A portion of the increase can be explained by increases in average hospitalist productivity; hospitalists are either working harder or more efficiently, which has likely had a role in increasing salaries. But probably the most significant factor leading to increases in salary is the excess demand for hospitalists that has outstripped the supply of doctors to fill the positions. This has led many organizations to increase salaries and provide incentives such as a sign-on bonus.

Table 27-1 provides the most recent national mean and median hospitalist compensation data available prior to the publication of this book. National measures of central tendency are only a starting point and a thorough understanding of the data requires a review of parameters like standard deviation, percentile rank, and so forth. It is also critical to understand the survey population, how terms were defined and the questions were asked, and to review subsets of the data based on region of the country, employer (eg, private practice or hospital employed), and other domains.