Feature

Paying for performance

From offering stocks and shares to implementing performance management techniques to giving retention bonuses, the healthcare industry is displaying refreshingly new approaches when it comes to giving incentives and compensations to the employees, finds out Sonal Shukla

After every two years BM Birla Heart Research Centre, Kolkata conducts a survey in order to ascertain market trends and gaps in Cost to Company (CTC). If the gaps are very large it closes the gap in stages. While determining quantum of revisions the top performers in each category get 20 percent to 30 percent. The quantum of revision percentage flows proportionate to relative performance ranking. This institution which is well-known for its HR practices has adopted a philosophy of 'pay for performance'. "We are very competitive. As far as practicable, we offer a common salary structure. We attract, retain high quality people, keep them motivated and reward them fairly," shares Ramesh Lal, Manager, HR, BM Birla Heart Research Centre.

Due to privatisation and corporatisation of the Indian healthcare industry there has been a big boom in the last 10 years. The base salary of all levels of healthcare workers has gone up probably because of two reasons - firstly because of the demand supply gap and secondly the sector is now offering more opportunities. Hence, retention of manpower and restricting HR budgets has become a very challenging job. Identifying the criticality attached to compensation packages and incentives in the manpower driven healthcare industry, Indian hospitals are today seen gearing up to attract and retain the best available talents and they are bound to do this, to remain afloat, from both point of view— their own sustenance as well as to protect their customer base.

'Paying' Attention

Compensations amount to 30-50 per cent of operating expenses of a Hospital and its impact on profitability is undeniable. Says Ankush Gupta, Manager-HR, PD Hinduja Hospital, Mumbai, "Compensation models help in bringing uniformity in the salary and helps remove disparity." According to experts compensation model or structure primarily plays the same role in healthcare as it plays in any industry or domain for its overall management and functioning. And the approach to compensation management is said to be the key to success or failure of any enterprise. It may vary from industry to industry, depending upon the criticality of the human resource requirements irrespective of the fact whether it is a manufacturing industry or service sector. However, health sector being primarily a human resource driven domain, the role of compensation model or structure becomes all the more important for its successful functioning. "The compensation model or structure actually affects the quality of services directly or indirectly wherein the minimum threshold is already pretty high, for it affects the issue of life and death or at least quality of life at the very minimum," shares Dr Praneet Kumar, Chief Operating Officer, Fortis Escorts Hospital, Jaipur and Director - Quality Assurance, Fortis Healthcare Limited.

Agrees Dr Shubnum Singh, Chief of Medical Affairs (External), Max Healthcare, New Delhi, "Quality resource comes at a high price and this itself is interrelated with high-efficiency." Thus, compensation plays an important role in not only recruiting and retaining employees but also increasing their satisfaction, rewarding and encouraging star performers and reducing turnover and enhancing employee loyalty. "Compensation package can be linked to business structure, employee recruitment, retention, motivation, performance, feedback and satisfaction," believes Dr Aninda Chaterjee, Centre Head, Wockhardt Hospital, Kolkata. However, compensation package necessary does not mean 'dollars per hour' but it should act like a total reward system containing non-monetary, direct and indirect elements feels Dr Chaterjee.

One Size Does Not Fit All

Hospitals today want best of both the worlds and are seen adopting a mix of all the available compensation models. "It is ideally not possible to have one single method. Therefore, one has to devise different models to suit one and all. Capacity availability is limited and this approach acts as a buffer to market forces in compensation models. Fixed is used for the bottom of the pyramid generally," believes Dr Singh. According to her, the fixed cum variable compensation model can give best of both the worlds as it has an element of security without strapping the earning potential of an individual. "Case in point is a doctor relocating from overseas. I can't afford to pay what he/ she has been earning overseas. Therefore, at the start the fixed compensation gives the security and as the practice grows, share from the revenue allows for the growth which one is looking for. Actually, this suits majority of the doctors." She adds. According to Prasanjit Dasgupta, GM-HR, AMRI Hospitals, Kolkata, medical consultants find incentives more attractive, as they are paid on the basis of work that is being done by them and their output is quantified whilst other employees get salary and increment on the basis of performance. In Dr Kumar's opinion, a pure staff model is a high fixed cost for a start-up facility. It breeds inefficiency and incompetence (as perceived) in the long run. Mixed model is practiced at Fortis Escorts Hospital, Jaipur. In the Hospital, the consultant medical staff is primarily deployed on the retainer-ship model with sharing. However, empanelled mode is offered to select doctors depending upon the individual merit of the case. "It would be pertinent to mention here that at Fortis, it is preferred to have this model. However, the whole methodology for engagement of consultant medical staff is determined by the overall merit of the case that brings the best for the benefit of the patients," explains Dr Kumar.

According to experts, it would be impertinent to generalise a compensation model for the entire sector especially for doctors. "Compensation model is in a state of flux and each individual hospital is struggling to evolve a satisfactory model that would be able to cater to its major requirements," believes Dr Kumar. Innovation in compensation modelling is also needed badly for technologists, nurses and other para-medical staff who have till date, not got their due. Healthcare services are a sum total of absolute team work and the whole chain of care givers need to be compensated equitably, rather than focussing only on the consultant medical staff. Incidentally, it is this anomaly that has resulted in widening of the gap in the capabilities and competencies of care givers in the chain beyond the medical staff. Gupta segregates the compensations into fixed pay, performance linked pay, retainer cum revenue sharing model and fee for service. According to him incentivisation for the paramedical and technical staff can be the model for the next decade and when it comes to doctors, revenue cum retainer is the best model so that they can focus on one institution. "From the retention point of view incentivisation can be a good proposition for them, as they will have the variable paying structure which will purely depend on their workload. This leads them stick to the organisation as they feel as partners in the growth of the organisation and not just salaried employees," opines Gupta. In Wockhardt Hospital, compensation model practiced is a normal combination of basic salary with addition of incentives, bonuses together and other benefits. "It helps to take care of multiple needs of an employee, which can inspire him to be productive," opines Dr Chaterjee.

Benchmarking Salaries

Today, there is no standard method for benchmarking salaries/ compensation matrix for medical staff especially the senior consultant staff. However, the prevailing market dynamics of the individual speciality or the specific competence of the concerned individual doctor, his/ her popularity and the power to pull the clientele do play a role in evolving the base structure for determination of the overall engagement of that doctor. "Salary or compensation alone is just one factor in finalisation of this engagement. Hence there is no model that may work as panacea. It is the individual merit of the doctor and the overall context that will help evolve a suitable model for engagement," opines Dr Kumar. According to him the hospital and the medical staff need to remain alive to the changing market dynamics along with being sensitive to, and aware of mutual requirements and aspirations to ensure a steady relationship. Any discomfort or break in this mutual trust for engagement results in loss for the clientele in both, short-term as well as long-term, as the hospital credibility is hurt with any such misadventure. In Hinduja Hospital, for junior staff, the compensation survey is conducted every year which determines the salary to be paid to junior doctors. "In this survey we observe salaries paid by our competitors and see whether our salary structure is up to the mark or not," explains Gupta. The senior level consultants' benchmarking of salary is difficult because they are either on fee-for-service model or retainer-cum-revenue model. It all depends upon the amount of clientele they have. In Max Healthcare the compensations given to consultants are based on their consult fees, practice base and the speciality they work in. On the other hand, the doctors at the resident level are offered salaries as a per centage increase of the salaries offered to the resident doctor in a Government Hospital. "Resident doctors who are just starting their careers will always want to work in a government hospital because the increased workload there gives them an opportunity of handling more number of cases and in return they gain more experience. Therefore, we literally have to give them double the salary of what they will get in a Government hospital," explains Dr Singh.

The Growth Path

The salary growth of employees and medical staff on rolls i.e. staff model is linked to their individual performance as well as overall performance of the hospital. It is decided upon market rate, inflation trend and market correction of benchmark salaries prevalent in the industry. "A robust Performance Management System (PMS) plays an important role in ensuring an equitable and rewarding appraisal process that determines the salary increase," opines Dr Praneet Kumar. Experts believe that compensation packages and incentives can't be seen in isolation. "For retention of staff at the middle and lower level, the compensation package is an important factor but the higher you go, though the compensation package is an important factor, aspects like working conditions and the general job satisfaction also plays an important role for retention of staff. Today, few doctors also desire to participate with equity in a venture, for they feel that the modality provides them a lever to catalyse better resource mobilisation for their kind of specialised/ speciality work. This ultimately leads to self-actualisation on one end and profit sharing opportunity on the other end. For doctors especially compensation package alone might not be the factor for retention of staff," opines Dr VMP Thomas, GM, Operations and Projects, Dr LH Hiranandani Hospital, Mumbai. Agrees Dr Singh, "It should address the needs of all levels of employees and cover work-life balance, monetary needs and instant reward and recognition systems. We go out of our ways to make it a comfortable place for them to work. What does a doctor need? What is his comfort level? He wants to practise in an environment where he has good support structure and best of equipment. That is what we have done." As she explains, Max Healthcare has developed a first of its kind intra-operative MRI in the country. Also, all the non-medical components of providing care are looked after by non-medical people in the Hospital. "Doctors many a times have to look after billing as well as counselling and other such non-medical components of the patient. However, we have specialised people whom we call 'mentors.' We train them internally to look after such non-medical aspects. It takes off the pressure from the doctor and helps him to remain focused," explains Dr Singh.

Instant rewards and recognition, offering stocks and retention bonus are few approaches applied by the Hospitals today with the way compensations are offered. Tremendous growth plans are being chalked out across various sectors and hospitals is one of them. Private equity firms have also started getting interested in this sector and there have been a few investments. Stock options have been very popular in the west for quite some time now and have gained a significant importance in the Indian markets since the last few years. "The whole idea behind Employee Stock Ownership Plan (ESOP) is to incentivise the people to create a huge value, which they too get to share as stock option holders. So, the business case for granting stocks to employees in Indian hospitals is the same as any other growing company- make them partners in growth and share the value they help create over the next few years," believes Tarun Gulati, VP, ESOP Direct, a Pune based company dealing with ESOPs.

Listed Hospitals like Fortis have started offering ESOPs to its medical staff also. "This will definitely help the organisation in terms of retaining the talent as somebody who has a long-term perspective he/ she will feel very happy about it," feels Dr Kumar.

Issues

Health sector being a manpower driven industry, the challenges with regards to human resource management is increasing day-by-day. The healthcare industry is currently grappling with human pool deficit. "It is a very challenging issue in today's scenario, where the opportunities available to the healthcare workers are plenty and the talent is hardly available," opines Gupta. Experts believe that within next five to six years a city like Mumbai will see commissioning of at least 2000 beds, which will demand up to 8000 new people to enter into the healthcare industry. Similarly, tier II and III cities will see organised sector putting up health facilities in these cities, thereby compounding the existing shortages further. The resultant effect will definitely question the compensation modelling beyond the current level of understanding and evolution.

Besides, the inherent attributes of the sector that have their own influence on determination of compensation models, the extraneous factors as a result of compensation levels and structures of other service industries especially IT, ITeS (Information Technology Enabled Service), communication, retail and others are playing a major role in increasing the challenges. Capacity shortage and worldwide demand, especially for the non-medical background personnel, is making them go for greener pastures. "Practices and opportunities from other sectors like IT are attracting people from non-medical/ clinical background leave healthcare. In addition, the service experience gained in the healthcare sector makes them more valuable. Consequently, the gap created in health sector is increasing which is pushing the salaries northwards," opines Dr Kumar. Moreover, the situation is same globally and therefore the cost advantage of South Asian countries is luring away to developed economies thereby increasing the salaries further. "In India, though the paying capacity of the population has reasonably increased, it is still far beyond international standards. Therefore, you cannot out price a procedure at the cost of paying a doctor," states Dr Singh. Given the rising competitive healthcare environment today, the paying capacity of the employer is an ongoing challenge. "The bigger challenges will stare at the sector tomorrow when the already inadequate human resource pool of today will start shrinking further in the coming years and that day is not very far. The statistics of entrant to medical and healthcare courses have shown a steady decline in the last decade and it has increased tremendously in last two-three years," explains Dr Kumar. Hence, there is an immediate need for introspection at the highest level to formulate an incentivation plan for those entering medical, nursing, healthcare and allied professions.

sonal.shukla.@expressindia.com