Provider Compensation in Rural Markets: Top 5 Lessons Learned

Over the past four years, we have worked with over a dozen provider compensation design and strategy projects for hospitals in rural markets. The smallest of these hospitals had one employed provider and the largest employed 50 providers. Many lessons were learned through these engagements, but five primary principles surfaced from our work in this area.

  1. It costs more to recruit and retain providers in rural markets than in urban. Paying a premium price for the providers you need is customary in rural markets, but the compensation still needs to be structured appropriately.
  2. You are never “too small” to have a provider compensation plan. Having a compensation plan can guide you in making difficult recruiting and retention decisions and help to support paying a premium price, if necessary.
  3. Educating the Board on provider compensation is essential. Board members are often presented with challenging and complex provider compensation matters. A basic understanding of provider compensation goes a long way in helping the organization make and execute sound decisions.
  4. Size and location are not excuses for neglecting compensation compliance. Ensuring provider compensation is compliant with regulations starts with good provider compensation governance. The same rules apply no matter how small and/or remote you may be.
  5. Fair Market Value is more than a number in a survey. Survey data is useful, but it has its limitations. Sometimes a specific market has conditions that just don’t conform to published data. In these instances, one of the most critical things an organization can do is to document every detail related to physician compensation. The more evidence your organization has available to substantiate that your market conditions require higher dollar amounts, the easier it is to justify higher compensation and act on those conditions.

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