Are your economic incentives self-defeating? - medical group practice - column

Physician Executive, Jan-Feb, 1989 by Hugh D. Long

in a prior column Long, H., "Group Practices May Ignore Economic

Realities: Commingling of Rents and Returns," Physician Executive

14(5):33-35, Sept.-Oct. 1988), the author discussed the tendency of

many group practices to ignore ordinary business economics. The

example discussed in that column was the inappropriate commingling

of rents and returns from the various factors of production in medical practice. A frequent result of this is physicians who also have ownership interests and/or managerial responsibilities having an inflated perception of their worth as physicians because they are underoompensated for their ownership/ management roles. In this column, the author addresses the inadvertent structuring of physician remuneration via income distribution or externally negotiated formulas that reward individual behavior that actually threatens the economic viability of the group.