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  • Chuck Hulse

Principle Centered Physician Compensation


How many books have you read and are able to recall the title after five, ten or more years? For me, Steven Covey’s Principle Centered Leadership is one of those books. Steven Covey tells us that unlike values, subjective and internal, principles represent true north.

When recently challenged with the challenge of creating a compensation plan for a surgical group, a MedMan administrator first focused the conversation on principles.


For all the reasons you know, it is with increasing frequency that we are seeing tension around physician compensation. Principle centered compensation programs can help take the bad taste out of crucial conversations around a shrinking pie. When someone feels like the compensation is unfair (often driven by the amount of their paycheck) the conversation can focus on the principle that is creating the unpleasantness, rather than the money itself.


The conversation focuses first on the principles that shape a sustainable model for income distribution. An example of a principle would be that doctors should be paid without regard to payer mix – or said differently, the patient’s insurance should be blind to the doctor so they do not feel the pressure to compete with each other for the higher paying patients.


An income distribution plan, or compensation model, is the result of these principle centered discussions. While financial forecasts are necessary to determine an impact of the model, a key to success is building the forecast, as the second step in the process, on assumptions stemming from previously defined principles.

At a time when we are focused on doing things right – efficiency and quality – it is important not to forget, as Covey reminds us, to do the right thing.

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