As the physician executive role evolves, so too must administrators’ approach to creating incentives that both attract and retain the best candidates. The market is competitive, with most candidates evaluating three to four offers. Those who create thoughtful incentives that are tailored to the physician leader’s specialty, life stage, and your organization’s goals will give you an edge in the consideration process. Here are some strategies to ensure your offer stands out.
Avoid Incentive Programs that Don’t Incentivize
Here’s an uncomfortable truth: most hospital incentive programs are designed to fail. Organizations routinely set bonus thresholds so high that physicians receive only about 10 percent of their potential bonus, regardless of performance, and tie compensation to metrics completely outside the physician executive’s control. Even when the incentives are rich and attainable, it often takes years before the results of the executive’s efforts materialize, and CMS ratings lag two to three years behind actual performance.
Instead of motivating the executive, these programs risk creating uncertainty and low job satisfaction. If a physician feels unsuccessful and unable to see the impact of their contributions, they are at risk of pursuing opportunities elsewhere. Your incentive structure needs to account for this reality, balancing obtainable short-term goals with aspirational long-term targets. This will keep your executive engaged and committed throughout their tenure.
Manage Expectations Early
I often see organizations approach goal-setting backwards. They hold the conversation at the end of the negotiation process, when they should have communicated expectations in advance — not only with candidates but also internally. Meet with your C-suite partners and gather input about how the incoming executive could help overcome challenges, make meaningful changes to how departments operate, and create KPIs that will help the physician executive support organizational goals. Ask your CFO for a report detailing how bonuses are being paid to start a conversation about whether existing targets are attainable or need to be reassessed. If your team isn’t getting paid, the bonus is not doing its job — and they are less enthusiastic about doing theirs.
For bonus points, be transparent with the candidate about what you’ve learned and how you’re compensating for any shortfalls to assure them they are being paid fairly. While competitors may keep candidates in the dark about realistic earning potential, transparency immediately builds trust and sets realistic expectations.
Set KPIs that are SMART: specific, measurable, achievable, relevant (to the role and the organization’s objectives), and time-bound — both short-term and long-term.
Short-term indicators like physician engagement scores, staff morale initiatives, and management training completion provide measurable wins within the first year that will both better prepare the executive for the work ahead and establish trust within the organization. Meanwhile, longer-term goals for clinical quality and cost-reduction initiatives can be phased in as the physician leader gains traction and influence.
Show Me the Lifestyle (and the Money)
A common misperception among healthcare leaders is that high compensation will compensate for lackluster incentives. In my experience, work-life balance accounts for roughly 40 percent of the motivation driving physicians toward executive roles. This is especially true for OBGYNs, anesthesiologists, and surgeons who are exhausted by demanding call schedules and emergency coverage.
When a physician is considering making the leap to becoming an executive, the conversations that excite their families revolve around free weekends and saying goodnight to the 11 p.m calls back to the hospital. Be sure to frame your opportunity around lifestyle improvement, not just career advancement, and that the incentives don’t unwittingly undermine the lifestyle improvements they desire.
Physician executives should be compensated in line with their C-suite peers — CMOs are typically the second-highest-compensated position in hospital leadership. When building compensation packages, employ multiple components: competitive base pay, achievable performance bonuses, RVU-based clinical production payments, and retention bonuses for three to five-year commitments. For late-career physicians, cash-deferred programs to minimize tax burdens are often appealing.
Motivation to Be a Great Physician and Executive
As the title suggests, physician executives are physicians first. They don’t want to abandon clinical work entirely, but they want it on their terms.
The physicians who thrive in leadership roles typically want reduced but maintained clinical hours with well-defined boundaries. That means specific days designated for clinical work (Fridays are popular), outpatient-only duties, no call responsibilities, and explicit agreements about emergency coverage.
Rural hospitals face a particular challenge here. The reality is that physician leaders too often become the default coverage whenever another physician is absent, which makes it difficult for them to attend to their administrative responsibilities. This is not sustainable for the executive nor the healthcare organization. Take care to draw the line clearly from the start and build a structure to support them. If your physician executive is constantly filling clinical gaps, they will not be able to meet their administrative goals and will quickly lose their incentive — both literally and figuratively.
In a 2024 study, physician executives’ primary motivations for pursuing leadership were to have a voice in organizational decisions and to build and sustain organizational culture. So the biggest, though less tangible, incentive you can offer is assurance that they will have a full seat at the table and the ability to influence decisions that impact the hospital’s operations and its community.
The best organizations commit to developing their physician executives into strong leaders and astute businesspeople — skills not taught in medical school. While only 21% of healthcare organizations offer formal leadership training, other organizations, such as the American Association for Physician Leadership (AAPL) and the American College of Healthcare Executives (ACHE), offer fantastic resources and programs to educate physician leaders on the administrative side of healthcare. Encourage candidates to pursue career development opportunities by building them into their incentive structure and covering their expenses. These investments will have a synergistic impact on your organization. They prove your commitment to the physician executive’s success, and increase performance, morale, and retention, while strengthening your management team and overall business operations.
The Right Incentives
A well-designed, customized incentive package that addresses the real challenges and rewards of physician leadership will attract, retain, and motivate top talent. The organizations that excel here are those with clear performance expectations, transparent compensation structures, and an authentic commitment to their physician leaders’ success throughout their careers.
Looking for more insights on physician executive recruitment and retention? Jackson Physician Search provides market intelligence, compensation benchmarking, and strategic guidance to help healthcare organizations build leadership teams that drive results. Reach out to learn how we can support your search.
About Mark Dotson
Mark began his career recruiting for Allied Health Therapists (PT, OT, and SLP) for long-term care facilities in 1996. In 2002, he joined HCA Healthcare, recruiting physicians of multiple specialties in the Tennessee, Kentucky, and Indiana markets. He also worked to develop a team dedicated to sourcing physicians nationally in specific areas of focus for the organization, helping HCA establish an in-house hospital service line for many of its hospitals. Mark saw the growing need for this line of service and was recruited to lead the recruitment effort of Cogent Healthcare.
Mark spent the next nine years in Hospital Medicine recruitment and business development with different companies before finding his way back to HCA. In 2016, he began leading HCA’s Physician Executive Recruitment and Development for the entire country. He quickly realized that combining his focus and excitement for working with physicians and helping grow their careers outside a clinical setting was a perfect fit for him. During his tenure, HCA established CMOs in more than 100+ facilities, as well as created and grew a new entry point for physicians to become leaders by adding the position of ACMO. In 2023, Mark led the company’s recruiting effort to assemble a group of physicians for their newly established team of Medical Directors for Medical Claim Denials. The effort proved successful. Mark and his team hired more than 50 physician leaders in less than 12 months.
Mark lives with his wife and son in Nashville, TN. Outside of work, he loves coaching baseball. He’s been a Little League coach in the local community since 2005, but he’s been happiest coaching his son’s team since 2017.
