Nonfinancial Performance Measures and Physician Compensation

2010 ◽  
Vol 22 (1) ◽  
pp. 57-64
Author(s):  
Shane S. Dikolli
Keyword(s):  
Empirical Evidence ◽  
Survey Data ◽  
Performance Measures ◽  
Pay For Performance ◽  
Clear Definition ◽  
Physician Compensation ◽  
Nonfinancial Performance ◽  
Nonfinancial Performance Measures ◽  
Definition Of

ABSTRACT: The Evans et al. (2010; hereafter EKNP) study maps rich survey data into plausible proxies for an array of conceptual variables of interest. It documents novel empirical evidence of determinants of the use of contractible performance measures and demonstrates the importance of nonfinancial performance measures (NPMs) in compensating physicians. The study also highlights the importance to future NPM researchers of a clear definition of NPMs and the application of that definition consistently throughout a given study. In addition, it is conceivable that the variables the EKNP study uses as moderators of the pay-for-performance relation might also moderate pay-for-complexity and pay-for-size relations. Finally, a further path forward from the study’s context is that physician attributes, which can be measured in creative ways, likely affect physician compensation.

Nonfinancial Performance Measures and Physician Compensation

2010 ◽  
Vol 22 (1) ◽  
pp. 31-56 ◽  
Author(s):  
John Harry Evans ◽  
Kyonghee Kim ◽  
Nandu J. Nagarajan ◽  
Sukesh Patro
Keyword(s):  
Performance Measures ◽  
Value Chain ◽  
The United States ◽  
Control Mechanisms ◽  
Fixed Rate ◽  
Compensation Contracts ◽  
Physician Compensation ◽  
Nonfinancial Measures ◽  
Nonfinancial Performance ◽  
Nonfinancial Performance Measures

ABSTRACT: This study utilizes a national survey of physicians in the United States, administered four times between 1996 and 2005, to examine the use of nonfinancial performance measures in physician compensation contracts. Consistent with agency theory, we find that nonfinancial measures are used more frequently when the measures are more informative; when alternative control mechanisms are complements rather than substitutes; and when external pressures for quality of care and cost containment are greater. Further, we find that contractual relationships in the health care value chain are interrelated; nonfinancial measures are more likely to be used to evaluate physician performance when the physicians’ practice is compensated based on fixed rate payments (i.e., capitation). We also find that physicians’ compensation contracts are more likely to incorporate nonfinancial performance measures when productivity in revenue generation is also used to evaluate performance. Taken together, the results suggest that nonfinancial performance measures play a significant role in physician compensation, acting to balance incentives tied to individual physician productivity.

An Empirical Investigation of an Incentive Plan that Includes Nonfinancial Performance Measures

2000 ◽  
Vol 75 (1) ◽  
pp. 65-92 ◽  
Author(s):  
Rajiv D. Banker ◽  
Gordon Potter ◽  
Dhinu Srinivasan
Keyword(s):  
Customer Satisfaction ◽  
Financial Performance ◽  
Empirical Evidence ◽  
Performance Measures ◽  
Financial Measures ◽  
Nonfinancial Measures ◽  
Nonfinancial Performance ◽  
Incentive Plan ◽  
Nonfinancial Performance Measures

Recent studies report an increasing use of nonfinancial measures such as product quality, customer satisfaction, and market share in performance measurement and compensation systems. A growing literature suggests that because current nonfinancial measures are better predictors of long-term financial performance than current financial measures, they help refocus managers on the long-term aspects of their actions. However, little empirical evidence is available on the relation between nonfinancial measures and financial performance, and even less is known about performance impacts of incorporating nonfinancial measures in incentive contracts. Using time-series data for 72 months from 18 hotels managed by a hospitality firm, this study provides empirical evidence on the behavior of nonfinancial measures and their impact on firm performance. The results indicate that nonfinancial measures of customer satisfaction are significantly associated with future financial performance and contain additional information not reflected in the past financial measures. Furthermore, both nonfinancial and financial performance improve following the implementation of an incentive plan that includes nonfinancial performance measures.

Recommendations on Disclosure of Nonfinancial Performance Measures

2002 ◽  
Vol 16 (4) ◽  
pp. 353-362 ◽  
Author(s):  
Laureen A. Maines ◽  
Eli Bartov ◽  
Patricia M. Fairfield ◽  
D. Eric Hirst ◽  
Teresa E. Iannaconi ◽  
...  
Keyword(s):  
Performance Measures ◽  
Nonfinancial Performance ◽  
Nonfinancial Performance Measures

An Empirical Investigation of the Performance Consequences of Nonfinancial Measures

2003 ◽  
Vol 15 (1) ◽  
pp. 193-223 ◽  
Author(s):  
Amal A. Said ◽  
Hassan R. HassabElnaby ◽  
Benson Wier
Keyword(s):  
Performance Measures ◽  
Accounting Performance ◽  
Performance Improvements ◽  
Future Performance ◽  
Nonfinancial Measures ◽  
Stock Market Performance ◽  
Nonfinancial Performance ◽  
Performance Consequences ◽  
Nonfinancial Performance Measures ◽  
Performance Measurement Systems

Firms are increasingly implementing new performance measurement systems to track nonfinancial metrics such as customer and employee satisfaction, quality, market share, productivity, and innovation. This study examines the implications of nonfinancial performance measures included in compensation contracts on current and future performance. Contextual factors, environmental factors, and strategic plans vary across firms and, in turn, adopting appropriate nonfinancial measures determines the performance consequences of such measures. Our findings support the contention that firms that employ a combination of financial and nonfinancial performance measures have significantly higher mean levels of returns on assets and higher levels of market returns. Although we find evidence that the adoption of nonfinancial measures improves firms' current and future stock market performance, we find only partial support for accounting performance improvements. Overall, the results indicate that the association between the use of nonfinancial measures and firm performance is contingent on the firm's operational and competitive characteristics.

The Relationship of Nonfinancial Performance Measures and Earnings Management

2010 ◽  
Vol 143-144 ◽  
pp. 1290-1294
Author(s):  
Yan Xu ◽  
Jun Zhang
Keyword(s):  
Earnings Management ◽  
Performance Measures ◽  
Environmental Uncertainty ◽  
Process Measures ◽  
Internal Process ◽  
Empirical Results ◽  
Nonfinancial Performance ◽  
Nonfinancial Performance Measures ◽  
Relationship Of ◽  
The Relationship

By using 62 China’s listed companies’ data and considering environmental uncertainty, I analyze the links of earnings management to nonfinancial performance measures, and then the relationships of earnings management and three suborder nonfinancial performance measures. The empirical results test that nonfinancial performance measures can help to control earnings management under increased environmental uncertainty, and so do internal process measures and learning & growth measures.

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