Incentive Plans

1. Incentive Plans Redesign-Finance Collaborative June 22, 2005

2. Introduction • Early work on Incentive Theory - Barnard, 1938 • Expanded by Clark & Wilson, 1961 & 1989 • Material: tangible rewards (salary, fringe benefits) • Solidary: intangible rewards (socializing, camaraderie) • Status: intangible rewards (prestige, recognition) • Purposive: intangible rewards (sense of mission)

3. Why Incentives? • Financial, Organizational bottom-line • Recruitment & Retention • Tool • Changed individual & team behavior • Changed corporate culture • Mission

4. Incentive Plans & “The Mission” • Poor productivity denies access to care • Poor productivity increases healthcare costs • Our mission is to the entire community, not just to those who make it through the door • Greater organizational revenues translates into improved access, facilities and personnel

5. Compromised Settings • Insufficient patient demand • Inadequate working infrastructure • Payor-mix issues (high uncompensated/sliding fee population) • Unionization (may present barriers or challenges)

6. Disadvantages of Incentive Plans • Increased administrative work/accountability • Increased demands on support staff • Increased variable costs • Change in focus (providers, recipients) • Unwanted competition • Good numbers, poor quality; overburdened systems

7. Incentivised Groups • Reimbursable Visits (Medical clinicians, Dentists, Dental Hygienists, CPSP, Mental Health) • Nurses • Executive Leadership • Departmental • Site Specific • Corporate (all employees)

8. Provider Metrics • Encounters (daily, monthly, quarterly, annual, per hr.) • RVUs (Relative Value Units) • Charges, coding accuracy • Panel size (more appropriate for capitated/MC) • Quality (clinical outcome measures, chronic disease management standards, etc.) • Overall Evaluation (productivity, quality, patient satisfaction, staff interactions, organizational and community involvement)

9. Team Examples/Discussion • Aaron E. Henry • Holyoke • Middletown • Rural • White River

10. Implementation of an Incentive Plan • Plan Design • Simplicity • Implementation and Communication • Integration into Organization • Return On Investment • Corporate Culture

11. Plan Design • Aligns strategic operating priorities with desired employee behavior • Performance metrics balance competing priorities, including productivity & quality • Stakeholders concur that targeted performance levels are realistic & fair, creating a “win-win” work environment

12. Simplicity • Program issues increase as the square of program components. Keep it simple. • Plan design (including measures, relevance to employee behaviors & payout potential) must be easy to understand by all employees • Easily engages employees to work toward objectives (simplicity must relate to complexity of jobs participating)

13. Implementation & Communication • Design & related implementation communications are pre-tested for clarity and understanding • Communication of performance results & progress toward goal attainment is comprehensive and clear • Measurement, tracking and reporting process is regarded as credible and reliable by all

14. Integration into Organization • Incentive plan performance measures integrated into evaluation process • Performance management process translates, encourages and reinforces desired behaviors • Process to give feedback must exist - to eliminate barriers & improve performance

15. Return On Investment • To be successful, the plan must generate more return than is paid to employees • Results must encourage proper work behavior and not create undesirable competition (good results, wrong behavior)

16. Corporate Culture • A level of open communication and trust must exist among employees and management • Units, sites, and departments must embrace teamwork, especially where work processes cross such boundaries • Consistent messages given at all levels about desired results and behaviors