Revenue sharing in a multi-physician practice is often done on a production based system. Production based pay gives the harder working physicians a larger slice of the earnings. Revenue allocation is also sometimes done based on a percentage of the revenue regardless of an individual's production. Both of these methods have pros and cons.
If the group is a single specialty group, both systems can often be used – a flat, smaller percentage divided equally and another portion based on production. This can depend on the type of specialty; if two doctors share the same specialty, equal payment can encourage them to back each other up; if one doctor is out sick or on vacation, the other doctor willingly steps up to help cover the workload.
In practices with multiples specialties, production based revenue allocation is an often used method. A large number of groups use receipts to measure productivity, where the direct costs are subtracted from the revenue and overhead costs are assigned. This system may seem fair but in areas of the country where most patients have low billable amounts, some physicians will be at a disadvantage. This will require the group to find a way to balance the mix.
How expenses of the practice itself are divided among the group can have a huge effect on income distributions. If expenses are to be divided evenly, it would be best if all the doctors’ revenue is somewhat equal. The other option is to charge all expenses that can be tracked to the doctor who uses them. This, however, could cause physicians to start taking shortcuts to save money and could affect the quality of care given to patients.
Regardless of how the revenue allocation is decided, an accurate and understandable system must be in place. All members of the group need to feel that they are getting a fair share and no one should feel as if they are carrying the bulk of the load.
