Vanderbilt pay plan rewards clinical production, research

Vanderbilt pay plan rewards clinical production, research

The physician pay plan in the Department of Medicine (DOM) at Vanderbilt University Medical School offers strong production incentives for clinical and research work, says DOM Vice Chair for Administration and Finance Gregg Tarquinio, Ph.D.

For clinical production, the plan fits a basic model popular in large multispecialty groups outside the academic sector: For production over certain thresholds set mainly by benchmarks, a physician earns bonuses. (See article, p. 11, for results of DOM’s incentive plan.) DOM has about 100 clinician-educators (CEs) assigned to put 80% of their effort into clinical activities and 20% into academic pursuits.

The DOM pay system for CEs has two production thresholds. The lower one (for most individuals) is the amount of production expressed in total RVUs needed to pay for the 80% of base salary that is expected to be defrayed by clinical production. Base salary is equal to 95% of the doctor’s total cash compensation in the previous year. To determine this threshold amount of RVUs, the base salary is divided by a benchmark dollars-per-total-RVU figure, calculated as explained below. For each RVU above this threshold up to the second threshold, DOM pays a bonus of 100% of the dollars/RVU rate.

The second threshold is set for all the physicians in each specialty division, and is derived from the benchmark production level for that specialty as determined by DOM. Most of the benchmark production levels were set when the plan began in 1999. The basic source for each specialty was the 75th percentile total-RVU production level in the MGMA academic physician survey current at that time. Vanderbilt also took a survey of specialty pay at 16 comparable teaching institutions, and used data from the Association of American Medical Colleges. Then, DOM took the benchmark production level for each specialty and multiplied it by 80% to get the actual bonus threshold for staff physicians in that specialty. Above this threshold, DOM pays 80% of the dollars/RVU rate for each additional RVU; the reduction from 100% factors in the CE physician’s academic responsibilities.

The dollars/RVU bonus rate above the threshold was also derived from benchmarks. First, using the same research techniques that established the benchmark production levels, benchmark salaries for each specialty were established. Then, DOM divided benchmark salary by benchmark RVU production to get the dollars/RVU level for each specialty.

Annual updates of the system have largely left intact the original total-RVU production levels, Tarquinio says. Each year, DOM management sets a targeted increase in the dollars/RVU levels, he notes, and this raises benchmark salary levels.

For physician-scientists–faculty members who put 80% of their effort into academic pursuits and 20% into clinical activities–DOM has an extensive system of bonuses that range from one up to six percentage points of base salary for various levels of research grants obtained. A very successful researcher can win multiple bonuses in a year.

Contact Tarquinio at (615) 322-2206 or

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