Although MGOA’s reputation for care and cutting-edge medical research was among the best in the world, Herndon and Rubash saw that MGOA had serious financial difficulties. In fact, that was one of the main reasons they were hired. In his previous position, Herndon had engineered a significant financial improvement at the hospital system of the University of Pittsburgh. There, Rubash had seen Herndon, chair of the orthopaedics department, with the faculty, take a relatively financially healthy department and put it in a much stronger position. When Herndon left, the department had an $18 million endowment and the revenues of the group had increased “through strategic recruitments and by building orthopaedic practices.” Now Herndon had brought Rubash to MGOA and was giving him the challenge of turning MGOA into a similar success story. Rubash acknowledged the challenge at MGOA seemed much bigger.
As a not-for-profit organization, MGOA’s primary goal had never been defined simply in monetary terms. However, decreasing reimbursements from both private and government insurers had forced MGOA to take a hard look at its financial condition. The group had long been running annual financial deficits on the order of several hundred thousand dollars. In order to finance the deficits, the group had been continually dipping into various endowment funds or borrowing money from the hospital. By the time Rubash and Herndon were recruited to MGOA, the endowment funds had essentially been depleted and the group had accumulated a debt bill with the hospital of over $1 million.
As part of an agreement with MGH, Herndon negotiated the forgiveness of the million-dollar debt.3 Rubash and Herndon would tackle any debt that accrued after their assumption of leadership, but as they told MGH during their hiring negotiations, to start out so deeply in the red was a “hit from which we could never recover.” The disappearance of the debt gave them an easier start, but it did nothing to staunch the ongoing financial bleed. The group still incurred a deficit of several hundred thousand dollars that year.
MGOA’s stated mission was “To provide the highest quality musculoskeletal patient care, teaching and research, with a dedication to service and a commitment to leadership.” In particular, MGOA, as a group, was committed to:
• Providing the highest quality patient care in every facet of orthopaedics.
• Devising patient centered, process-oriented, efficient clinical programs that ensured smooth delivery of care.
• Promoting orthopaedic education by facilitating exchange of concepts, information, and techniques.
• Establishing an ethos of effective cooperation by being dedicated to teamwork.
Rubash and Herndon did not change the above goals after their arrival at MGOA. However, they unofficially added an additional commitment: achieving financial stability. Rubash told the MGOA doctors “with financial security, we will be able to do all of the other things included in our mission 3 Again, the debt was a result of money MGH had lent MGOA. It was not as if MGOA had defaulted on a loan from an outside bank.
For the exclusive use of D. Chen, 2018.
This document is authorized for use only by Dongliang Chen in HRM 5030 Comp and Bens-1 taught by MATTHEW SAMEL, Johnson & Wales University from May 2018 to Nov 2018.
904-028 Performance Pay for MGOA Physicians (A)