In today’s challenging managed care environment, academic departments in U.S. medical schools and their academic practice plans are under considerable pressure to generate sufficient revenue from clinical activities to support their educational and research missions (1). Studies demonstrating how various clinical departments have been able to succeed in generating adequate revenue to support their teaching and research missions have been published over the last several years (2—8). For the purpose of this article, a literature search was conducted using PubMed for articles containing the key words "practice plans" published since 2000. In addition, articles cited in these recent publications were also reviewed.
The Joint Program in Neonatology at the Harvard Medical School has attempted to reward and encourage faculty members for both their academic and clinical activities (2). Studies summarizing similar creative practice plans for internal medicine (3, 4), pathology (5), surgery (6), emergency medicine (7), and a division of gastroenterology and hepatology in a department of internal medicine have also been published (8). Common goals among all these plans, representing a variety of clinical disciplines, have been to increase faculty clinical productivity, to enhance research and scholarly activity and to improve overall career satisfaction.
When one of the authors (REH) became Chair of the Department of Psychiatry and Behavioral Sciences at the University of California, Davis School of Medicine (UC Davis) and another author (NCS) became the Chief Administrative Officer (C.A.O) in the summer of 1998, they developed a faculty compensation plan that would assign a monetary value to various educational and research activities. The goal was to increase scholarly activities, as measured by the number of publications, and to increase research productivity, as measured by the total number and dollar value of grants.
At University of California schools of medicine, each school develops its own compensation guidelines that individual departments must follow and that address general issues applicable to all faculty members. Such issues are sabbatical leave, childbearing leave, family leave, and leave due to prolonged illness. Remaining issues, that may be relevant to individual specialties, are left up to the departments. All faculty members in a department must be consulted on the specifics of the plan, and all departmental plans are reviewed by a faculty committee advisory to the Dean to insure fairness and adherence to school of medicine policies.
Faculty members at University of California (UC) schools of medicine have three components to their salary: a base (X), a differential (Y), and a bonus (Z). The base, or X, is derived from the UC salary schedule according to rank (assistant, associate, or full professor) and is given to support educational and research missions. In addition, each rank (assistant, associate, and full professor) has 5—9 steps at which faculty members are reviewed for merit advancement every 2 years for assistant and associate professors and every 3 years for professors. The dollar value of the X increases with each merit increase in step within the rank. The Y, or differential, is negotiated annually with the Chair and is tied to generating clinical revenue or to participation in additional research and/or departmental or school educational activities. The Z, or bonus, is paid when a faculty member has earned clinical income or has generated educational/research credit over and beyond what is required to cover one’s salary.
In their annual meetings with the Chair, faculty members are assigned a salary goal, which is the amount of money and/or academic credits necessary to cover their salary, fringe benefits, and a departmental academic assessment charged against total compensation and fringe benefits. Currently this assessment is 16%. For faculty members who have their base salary covered by a state FTE, the value of the FTE is not included in the salary goal. Currently only 13 of 42 faculty members have an FTE.
Faculty are given percent effort credits against their total compensation and benefits for selected departmental administrative activities. These activities are shown in t1. Credit is given to the entire salary (X + Y) and benefits since the administrative activities are time-based and hence are calculated as a percentage of total effort.
Faculty are also given credit for various teaching and academic responsibilities. Only teaching and academic activities that may be objectively measured or documented by the department’s training office, which maintains records, are included. Credit for these activities is given as a percentage of the base salary or X, since the purpose of the X is to support research and education (t2). For department-based teaching, credit is given for 100% of contact hours and for university-based teaching (in other departments or schools in the University) 50% of contact hours is credited. Less credit was given for nondepartmental teaching since faculty felt that teaching priority should be given to departmental courses for medical students and to teaching and supervising psychiatry residents.
For scholarship and community service, credit is given as a percentage of the "X" and is based on the faculty member’s activities for the previous year (t3). A report of all these activities, called the Annual Report of Academic Activities, is published yearly and includes all scholarly and research accomplishments for the prior academic year and is collected from the entire faculty prior to their meeting with the Chair. Credit is not given for in press publications, but only for publications that appeared in print or electronically during the previous year. For research grants, credit is given to faculty members as a percentage of their X and is based on two factors: 1) whether the granting agency is federal or nonfederal and 2) the annual direct costs of the grant (t4).
The effective date of the first year of this compensation plan was July 1, 1999. The total number of grants, total dollar value of all grants, and total value of grants per faculty member in academic years 1998—1999 and 2002—2003 are shown on t5. Although the number of faculty members increased 11.4% between July 1, 1999 and June 30, 2003, from 35 to 39, the total dollar value of grants per faculty member increased 276.8%.
The number of peer-reviewed papers per faculty member and total number of publications (both peer-reviewed and non-peer-reviewed, such as book chapters or books) per faculty member increased 8.9% and 31.4% respectively, between academic years 1998—1999 and 2002—2003 (t6). A 4-year period was used since only publications that actually appeared during the entire prior academic year are included. As a result, there is always a 1-year delay in the report of publications. In addition, these numbers reflect publications for which an individual faculty member served as an author or editor. In some cases, two or more faculty members in the Department were listed on a publication. When you count only unduplicated publications, the numbers increased from 93 in 1998—1999 to 100 in 2002—2003, a 7.5% increase.
We believe that the allocation of a dollar value to specific educational and research activities provides tangible, financial incentives to faculty to devote both time and energy to this work. Verbal encouragement of research or educational activities, without appropriate financial incentives, in our opinion, rings hollow to faculty members and has only limited utility. It is not our intention to imply that financial incentives for education and research are the only means to increase productivity since other authors have shown that research training through advanced degrees or fellowships is also successful (9). Other approaches shown to be effective are a faculty development curriculum (10) and unrestricted research grants for young faculty (11).
The department has been able to support this incentive program primarily because the vast majority of its clinical income is derived from clinical contracts for psychiatric services with county and state agencies. The ability to provide such contractual services is probably mainly limited to psychiatric departments. Included in these contracts is a small overhead allocation, which, when combined with the faculty academic assessment, generates sufficient funds to support the faculty compensation plan. For instance, for the July 1, 2002 — June 30, 2003 academic/fiscal year, faculty contributed $847,740 in academic assessment funds to the practice plan but received $1,057,493 in administrative, teaching, academic, scholarship and community credits. In other words, for every dollar contributed to the academic assessment fund, faculty received approximately $1.25 in return. Such information is communicated annually to faculty so they realize that the funds that they contribute do not pay for all the academic credits that they receive and that such an allocation can continue only if the department remains profitable.
Each year the faculty practice plan is carefully reviewed with the faculty, modified and improved. In other words, the practice plan is truly a continuous work in progress that is updated annually. The plan would not be successful without the faculty’s complete support and belief in its objectivity and fairness, an essential ingredient reported also by others (6—8). It would also not be financially feasible if the department were dependent solely on revenue generated from traditional clinical activities. If incentives for faculty effort are aligned fairly and objectively for research and scholarly activities, the results should be robust and gratifying for the faculty member, the Chair, and the department.