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Mayo Clinic in Rochester. Forum News Service file photo

Study: Putting doctors on salary delivers equity

ROCHESTER, Minn. -- Given all that we think we know about human nature, the way they pay doctors at Mayo Clinic should be a prescription for disaster.

While most of the group-practice marketplace rewards doctors based on output and raw ambition, for over 40 years, the Rochester healthcare giant has followed a seemingly utopian, so-called structured compensation plan. Upon being hired, all new Mayo doctors agree to a no-soup-for-you salaried system utilizing medical specialty benchmarks and a pay model explicitly rejecting the performance bonuses, seniority pay and bump-ups tied to academic rank offered in health systems elsewhere.

And yes, they know what you're thinking: with your doctor's pay set in stone from now until the retirement party, why would a clinician do more than the bare minimum? Yet if it defies conventional wisdom, this equity-first pay method has served the health system while it has held a hold on the nation's best hospitals rankings that is the envy of the marketplace.

So it does work. But is it really equitable?

"The data that women physicians are paid less for the same work has been growing for years," said Dr. Sharonne Hayes, a professor of cardiovascular medicine at Mayo Clinic, and the organization's director of diversity and inclusion. "Every time one of these studies would be published, I would have colleagues come up to me and say, 'I know we are supposed to have pay equity here, Sharonne, but do we really have it?'"

After all, even an equitable pay structure is capable of a million small shortcuts leaving some people paid more than others for doing the same work.

'We wanted to know if we were following the plan," said Hayes, "and if it was doing what we wanted it to do, or were we making exceptions?" To answer that question, Hayes and her two co-authors submitted detailed pay and clinical practice information to a third party compensation analysis firm for review -- anonymous data outlining the position held and pay packages for 2,845 physicians at its clinics in Minnesota, Arizona and Florida.

When the results came in, the authors discovered that 96% of Mayo clinicians were paid the expected salary for their profession, and that the gender, ethnicity and race of the 4% who were paid more or less than the target salary did not differ from their overall representation in the clinic.

The group recently published these results in the journal Mayo Clinic Proceedings.

"So it wasn't a systematic over- or under-pay of any group," Hayes said. "Some had legacy leadership pay since the '90s. A few were in blended roles. A few had pay held for disciplinary actions. We figured out internally that these disparities all had reasons unrelated to gender."

"The other thing that was really gratifying," she added, "was that when they presented the data, they said 'We've never had anybody in any industry who got only a 4% deviation.'" Hayes said the news came as a relief but not a surprise. "'I'm married to a fellow cardiologist," she said. "I have seen our two paychecks come in, so I was pretty confident we pay women equally. But....nobody had ever done a large-scale study."

The authors would have faced a dilemma had the results shown that the clinic underpaid women or ethnic minorities, given that Hayes said they were prepared to publish the data regardless.

"I have a friend in another health system who found out after an audit that she was paid $20,000 less per year than her colleagues for doing the very same work, and that she had been for years," Hayes said. "When that audit came out, they eventually caught her up with her colleagues, but there was no back pay. And the way she feels about her organization who let that happen to her for years was kind of corrosive and toxic."

The results no doubt came as welcome to Hayes' two coauthors, past and present Mayo CEOs Dr. John Noseworthy and Dr. Gianrico Farrugia. Beyond the paper's reassurances for the clinic -- Hayes sees the pay equity data as a recruiting tool -- a second question raised by the findings is if the pay equity promoted by a physician-salary method adds one more argument to the calls for moving medicine away from fee-for-service and toward an integrative care approach.

"Not every aspect of this might work at another organization," said Hayes. "I think a salary-only model is perceived by many health systems as so opposite to the fundamental way that physicians have been reared, that it seems virtually not replicable. Some probably view this as unique to Mayo's history of team-based care. Others may think their own people wouldn't be motivated by enticements that are not financial."

All that being said, Hayes says the urge to work for a fixed paycheck is strong.

"I talk to my friends, some of who are RVU or fee-for-service based, and they would love to not be penalized for doing the right thing at the right time, as opposed to feeling a bit pushed to do a procedure. . . . You can’t do it overnight. I have friends all over the country, where 90% of their salary is how much they do. Going from a model where you are productivity based will require disincentivizing the doing more, that does not help the patient."

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