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Reimagining Physician Compensation: A Two-Road Strategy

With over 21 years of healthcare advisory experience, Ancore Health's CEO Eric Passon speaks about their two-road strategy for developing physician compensation plans and delivering purposeful and profitable results in the healthcare industry.


Q: Tell us about Ancore Health and how your team is coupling consulting with analytics to deliver results with a purpose and profit.

A: I will give you a recent example. We were helping a large primary care group reimagine their compensation model. Physicians were burning out, felt underappreciated and administration was struggling with the economics. We facilitated a visioning session where we helped the group (physicians and administrative leaders) understand how they make money and spend money. We also helped gain consensus on the purpose of the group (what makes them special). Many physicians and administrators cannot articulate the purpose of the medical group and how their reporting/analytics and compensation is aligned.

Q: CEOs of a healthcare organizations are constantly looking for ways to improve physician compensation plans. What are some common mistakes you should avoid?

A: One common mistake that many healthcare organizations make is relying solely on a survey-based compensation per wRVU model. This model does not align with the purpose of the physician enterprise and is not financially sustainable in the long term. Additionally, it puts a disproportionate amount of business risk on the employer organization, while physicians have no skin in the game for revenue cycle, contracting, inflation, or operating expenses.

Another mistake is not having a standard operating model, which allows physicians to have a fair amount of autonomy over their schedules and clinical practice. This creates variability in performance, patient experience, and poses challenges when moving to value-based care payment models. Furthermore, fee schedule changes can create unnecessary administrative burden and may erode physician trust.

Q: How does Ancore Health develop a physician compensation plan that aligns with the client’s purpose and strategy?

A: It is crucial to start with your purpose and strategy when developing a physician compensation plan. We have developed a physician compensation framework for healthcare organizations called the Two-Roads strategy.

In the first road, we empower healthcare organizations to lean into their purpose with Ancore’s Brand Driven Model. This is an easily administered model that compensates physicians comparably to other executives within the organization. When adopting the first road, a tight operating model with little to no variability in clinical and business operations is essential. When the healthcare organization takes on the bulk of the risk, the employer organization calls the shots.

In the second road, we delegate risk and offer upside to the physicians through the Equity Driven Model. Under this approach, physician leaders are well informed and engaged in the business of healthcare. With the second road, your analytics infrastructure and reporting should be exceptionally strong. These P&L or collections-based models do not require physicians to be CPAs but does invite them to understand the business reality of the practice.


About Eric Passon:

Eric Passon serves as the Chief Executive Officer at Ancore Health. Eric has over 21 years of healthcare advisory experience in financial operations, revenue cycle management, mergers and acquisitions, technology innovation, and traditional consulting services in both startups and publicly traded environments.

Prior to Ancore Health, Eric served as Executive Vice President of Financial Operations and Revenue Cycle Management for The Advisory Board Company’s consulting and management division, serving as a thought partner for not for profit, for profit, and academic medical centers. In this role, Eric and his team developed financially sustainable relationships between health systems and physicians.

Prior to The Advisory Board Company, Eric served as Director of Southwind Health Partners, a startup turnaround practice management company acquired by The Advisory Board Company in 2009. Prior to Southwind, Eric served in multiple roles at TeamHealth, including Vice President of Finance and Administration in the Anesthesia Services Division and Manager of Acquisition Analysis. Eric graduated from University of Tennessee, Martin with a Master of Business Administration. He also has a Bachelor of Science in Accounting from University of Central Florida.


Automated Medical Coding

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