Kathleen Wessel (Host): Hello and welcome to AHA Bringing Value series from the American Hospital Association. In this podcast series, we speak with AHA business partners and learn how they support AHA hospital and health system members. I'm Kathleen Wessell, Vice President of Business Management and Operations at the AHA.

And joining me today are Dr. Sarah Vogler, Chief of Staff for Cleveland Clinic's Florida Market, and Joe Davio, Consulting Manager at SullivanCotter. In this episode, Sarah and Joe will discuss how Sarah's organization has created a more structured, efficient, and transparent approach to compensation management, while also reducing compensation team turnover. Welcome to the podcast, Sarah and Joe.

Joe Davio, MBA: Thanks for having us.

Dr. Sarah Vogler, MD: Thanks for having us.

Host: I want to start off with you, Sarah. I can imagine it must have been a struggle to manage more than 400 individual physician contracts all at once. What would you say were the biggest operational or strategic challenges Cleveland Clinics faced?

Dr. Sarah Vogler, MD: And so, at the time, we were managing just a rapid growth, like you said, an immediate infusion in the Florida market that was driven by acquisition of two hospital systems. So, it was a combination of increase in scale, complexity and cultural transition, which from a physician standpoint, the first thing you start to worry about is, is my compensation going to change? Are my benefits going to change? Is my practice going to change? Right? So those three things kind of hit you.

And I think the compensation piece is the one that they don't teach you in med school. So, that can cause disruption pretty quickly. And we were balancing coming in and understanding does the compensation work in alignment with what Cleveland Clinic kind of expects from culture, quality, and performance? And where did we need to make some changes? Where did we have to understand things better to maintain consistency, communication, and just understanding? And really, fundamentally, like what was the mix of the compensation models that we were stepping into and how to best manage those across the system and the entire Florida market?

And so, a new team coming together, looking for a way to make this structured and sustainable to support the integration, and also probably our most rapidly growing market for Cleveland Clinic.

Joe Davio, MBA: That was an unusual circumstance that Cleveland Clinic, Florida was in, especially on the heels of a merger or an acquisition type of environment. Naturally, a medical group will reach a critical mass where they can no longer just manage arrangements on an individual basis. Even when there's good consistency in the plan design, organizations will struggle with efficiency, especially post integration. So quite simply, this dynamic introduces new complexity into the compensation process

And over time, this variability often results in concentrated knowledge dependencies, but we refer to as a hero model. And so when Cleveland Clinic, Florida lost their person, they were in a really difficult position. So, they had experienced a single point of failure that contributed to a really urgent action being taken. So, compounding the issue, this may lead to errors in compensation, which is an inevitable byproduct of complexity and can quickly erode physician trust.

So, rebuilding that trust is time sensitive and jumping in was really important, and that's even more difficult than preventing the issue, as you want to do through some upfront design. So, the trick here is to get upstream of the issues into governance.

Host: Okay, that makes sense. So, this partnership between both of you working together, and where SullivanCotter starts, placed an interim leader at Cleveland Clinic to stabilize operations and to support the compensation team. How did the initial priorities evolve as you began evaluating kind of this broader process?

Dr. Sarah Vogler, MD: So initially, I'll say I was new to the team. Thankfully, Joe joined the team. And I had to just understand the foundation of what I was stepping into, align that with Cleveland Clinic Resources. I was familiar with at least Cleveland Clinic Enterprise philosophy around compensation, but needed just the expertise given our rapid growth in this acquisition. So, joe entered. He stepped in and was able to shadow our processes for a short period of time, get a broader understanding, and some of that foundational knowledge too. And then, he helped prioritize the high impact, low effort options that we had, right? What's the best bang for your buck at that point to kind of gain back some time and efficiency, which ultimately is going to lead to how we can rebuild trust and better understanding and managing the compensation. But you can really drown in details out of the gate in some of this. So, it was prioritizing what has the biggest influence with the least amount of effort.

Joe Davio, MBA: So as we worked, Dr. Vogler and I, together, it was apparent that she was having to get involved in a lot of compensation discussions. And in the interest of improving the utilization of her available resources and her time, it was determined that many of the management and operational details could and should be managed by a smaller group And that the strategic design oversight decisions should live with her as chair, as compensation committee, which she now leads and serves in that capacity. So essentially, we put a two-tier governance structure in place that now consists of formal governance and oversight group, but then a subgroup that fits underneath that that manages day-to-day discussions. Ultimately, this structure aligns and reports to the Cleveland Clinic enterprise team.

Host: That bifurcation really, really makes sense in that respect. How did the team balance improving tools, governance, you know, market review processes while maintaining kind of a culture and compensation philosophy that are core to Cleveland Clinic?

Dr. Sarah Vogler, MD: Yeah, I think you're hitting on the tricky part, right? You have to operationalize it while also maintaining the cultural alignment and infusing this cultural alignment in a group of hospitals it was frankly new to. So, we were very intentional about maintaining that Cleveland Clinic compensation philosophy at the highest level while improving the process.

So, we were selective about how we spent our time. Joe kind of pulled me out of spending time on very individual transactions and getting lost in the details to understanding, "Okay, here's modeling, here's processes, here's just workflows that we can automate." Because we were falling behind in doing department reviews, right? And as soon as you say something like falling behind in compensation, you start to think. People are wondering, "Can I trust them? What's happening? Should I start negotiating on my own behalf? It can just drive more of a problem. So fundamentally, the way the Cleveland Clinic manages all physicians, which I actually think is a, great part of being a physician at the Cleveland Clinic is that we go through annual performance reviews with physician leaders and other leaders across the enterprise.

That is primarily driven to look at our career development, education, research, clinical care performance. And we parallel that also with a compensation review. That's more so even going on in the background. So, it's not as forward facing to the physicians, but we're doing a compensation review on each of the service lines as they do their annual performance review to ensure benchmarking, assess how much that benchmarking might have moved over the course of the year, or is this a group we really have to do heavy recruiting or we have retention problems in to assess that? Well, the physician leaders are having some key conversations with those physicians to see what is their retention risk, right?

So at any given time in the Cleveland Clinic life cycle, there's 25% of all service lines in an annual review. And once kind of the quarter ends, you have got to be ready to move on because the whole batch of new physicians are ready and waiting to start moving through this review. So, that was where we were struggling to like stay above water on those: acquiring new compensation models, new doctors, and moving it forward.

So, enter Joe, right? That's where we started having to come up with very standardized models for each of the service lines, rather than doing one-offs, depending on what hospital and what nuances that physician may be coming forward with. And having a very disciplined review process where we had a standard model, standard evaluation of things like call schedules, additional work being done, and also evaluating how we needed that model for the compensation to support our recruitment and retention. So really, it's around standardization and staying focused on what your timeline needs to be.

Joe Davio, MBA: Tools really helped. I mean, it sounds simple, but we developed a standard tool that really forced the three standard models that Dr. Vogler described. So, we are using our benchmark survey data in building up a salary model, a productivity model, or a shift-based model based on the established standards.

And when we use a standard tool, it forces the same formula every single time. It also creates an output that we can transparently report to physicians where now everyone is receiving a side by side transparently throughout the APR cycle. And that, I think, brought a lot of value to physicians who maybe felt like before they needed to negotiate, now they were given information transparently. They knew that what happened in the market would show up through this standard process and whatever was going to happen this year would happen, and then it's a repeatable process each year after that.

Dr. Sarah Vogler, MD: Yeah. The simple tool of that side by side provided so much clarity and improved, I think, the trust in the process. That was remarkable that they were able to see "Here's what it was, here's what it will be." And even if it didn't really change, it was just the fact that it was being reviewed, on a yearly basis, that you didn't have to go ask for a review or wonder if it was being reviewed. Like, you could see how it was changing over time.

Host: Yeah. And even all the individual elements within, those were being checked. Excellent. Thank you for running through that. Sarah, What changes have had the greatest impact on physician engagement, and leadership's understanding of compensation models since implementing this new approach?

Dr. Sarah Vogler, MD: The biggest impact on engagement, honestly, has just been that predictability and understanding it's going to be part of a yearly review. don't have to ask for it. You don't have to wonder. We're using benchmarks. We have a standard process. There are certain things that come up in a normal life cycle of a physician. You know, what's their total FTE going to be attributed to clinical work versus education versus research? And there are standard processes that we work around that. So, it's not kind of wondering every time somebody moves into a different stage in their career, how that's going to work from a compensation standpoint.

So, that clarity and predictability, it goes a long way with engagement and trust, right? It's not something physicians want to have to worry about. None of us went to med school thinking about how were you going to negotiate compensation? So, I think having that predictability is huge.

Joe Davio, MBA: I think it was predictability, transparency, and then objectivity in approach, right? Because before, there were general processes, but there was still an element of subjective decision-making occurring. And so, when you approach it objectively, there's no longer this concern of equity or fairness. Everyone within the medical group is treated the same way, and that also builds a lot of trust in the same way that Dr. Vogler mentioned previously.

Dr. Sarah Vogler, MD: And it also was fun to see like the committee piece of it evolve so there wasn't the expert, right? A lot of people know Joe, the Benchmarking wizard, right? And understanding these different models And that they know me from a leadership standpoint, but I think there's also this trust in the fact that there is a group of people that are really invested in ensuring that compensation is fair and communicated appropriately. And that's gone a long way.

Host: That's great. You're a wizard Joe. So, what lessons or best practices would you share with the other health systems that are trying manage physician compensation across these multiple markets similar to yours?

Dr. Sarah Vogler, MD: Probably some of the same pitfalls that I had walking into this is do you want to hit the engagement and trust level by not changing anything? Or should you just flip everything and just rip the bandaid off? And I think that that's not the right approach. The most effective way to kind of wade into this is to anchor in a very clear compensation philosophy and know that that may lead to some things staying the same mostly, or other things changing. But as long as you keep this core philosophy, then you're all kind of rowing in the same direction, moving towards the same goal. And it becomes that standardization that everybody can expect and trust.

Host: We have come to end of our podcast. I want to extend a big thank you to our guests, Dr. Sarah Vogler and Joe Davio for joining today's podcast and sharing their insights with members. To our listeners, If you'd like to learn more about SullivanCotter, please visit sullivancotter.com. This has been an AHA Bringing Value Series, brought to you by the American Hospital Association. Thanks for joining us.