Blog Post August 8, 2018 Considerations for Clinical Research Compensation Authors Keith Graff Jessica Turgon A robust, high-quality clinical or health service research program can be a significant differentiator for community hospitals and health systems. While academic medical centers must conduct clinical research to comply with graduate medical education requirements, many nonacademic institutions are choosing to develop these programs for their strategic value and the meaningful financial returns that an active research enterprise can generate.Research Investments and Key Programmatic Elements Reasons that hospitals may want to invest in enhanced research programs include a renewed ability to: Provide market-leading value to patients, physicians, payers, and other stakeholders.Elevate the hospital’s reputation and increase its market presence.Attract more patients and serve as a recruitment tool for top physicians.Drive downstream referrals and revenues.Have the program serve as the focus of planned giving and other philanthropic efforts.Tie their research outcomes to population health.Increase the quality of care while lowering its cost.However, any hospital looking to develop or expand a research program should first ensure that certain critical elements are in place, including: A clear program vision and focus on research areas that align with the hospital’s objectives.An organizational structure that provides leadership and accountability for the research enterprise.An ongoing institutional commitment to investment in research, with well-developed budgeting and billing operations to maximize the return on that investment.A recruitment plan and compensation model that attract and incentivize physicians interested in clinical research.Research performance standards and metrics.A compliance program that is managed either within the hospital or through its affiliates.While these components are important, the degree of physician engagement in the research enterprise could be considered a “make or break” factor. Fundamentally, a research program cannot exist without (1) principal investigators to lead and ultimately be accountable for all studies or (2) coinvestigators to identify and enroll eligible patients. Furthermore, physician relationships with sponsors are often a first step to identifying new trial opportunities and acquiring funding for investigator-initiated studies. Research-Related Incentives for Fully Clinical Physicians For physicians who are considered fully clinical (i.e., those who do not have contractual obligations and/or protected time to engage in research activities), incentive payments (beyond base compensation) are most often tied to productivity targets. This type of target is relatively easy for a hospital to monitor and measure, and the additional net revenue generated by a physician’s above-baseline volume provides a clear financial mechanism for the incentive payment. If a hospital is interested in having physicians direct their efforts toward a different target (e.g., increased clinical trial activity), the details of the incentive structure may change, but the key underlying concepts remain the same: Clearly define and communicate to all eligible physicians the financial incentive and requirements to receive it.Implement a transparent system to monitor and measure physician performance relative to the target.Scale the financial incentive appropriately such that:Many/most of the eligible physicians consider it reasonable compensation for the effort required to achieve the target.The sum of all incentive payments—or whatever portion of the sum is not covered by direct research revenue—represents a feasible annual investment for the hospital to make until the program becomes self-sustaining.Establish the level of compensation for nonclinical effort relative to the market (e.g., 90% of research salary covered by grants).Define the market and market comperators for nonclinical effort.Identify whether compensation targets recognize differences across groups, including:Basic science versus clinical science specialties.PhD versus MD degree types.Years of service.Review whether the compensation framework allows for some variability based on:Departmental funds available (e.g., excess clinical funds, philanthropy).Specified needs of departments.Set up the appropriate ratio of fixed-to-variable compensation for nonclinical activities.A hospital with the goal of growing its research enterprise needs to approach each of these core performance target concepts with a focus on determining a sustainable payment model that incentivizes widespread physician engagement in clinical research activities. Simultaneously, the institution should take into account the impact that the maximum research stipend will have on the fair market value of physicians’ total compensation as regulatory scrutiny increases.