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Unreimbursed days are a big issue for the hospital. But not as much for the physician. Right now, a physician is held responsible for unreimbursed days, technically. But he doesn't hear about them. I try to educate him. The doctor might not even care. It affects the hospital if it's not reimbursed. But whether it ever affects the physician, I don't know.

Rewards are another means for supporting—or undermining—the coordination of work. Rewards traditionally have been tied to individual or functional outcomes, which tends to focus attention on subgoal optimization at the expense of outcomes that are important to the organization.95 Ruth Wageman and George Baker showed that parties engaged in interdependent tasks are most likely to coordinate their tasks effectively if their rewards are also interdependent.96 However, because rewards often are put in place without a clear understanding of how they are expected to work, misalignment is common.97 Research indicates that more individualized rewards are associated with lower levels of coordination, whereas shared rewards have been found to support coordination and goal commitment.98 The bottom line of this research is clear: Participants with shared rewards are more likely to work in a coordinated way with one another.

Some of the hospitals in our study had adopted rewards as another means for aligning the behavior of participants with the goals of the hospital. In five of the nine hospitals, nurses or physical therapists or both were rewarded for contributing to team performance. At Presbyterian Plano Hospital, a high performing hospital in our study, employees were rewarded for both team performance and individual performance. The administrative director of patient services explained:

There is a system of "success sharing." The hospital has three targets, relating to cost, service, and quality. If they are met, there are payments to all employees. In addition, each employee is given an individual bonus depending on (1) service, (2) whether she or he has received any disciplinary complaints, and (3) whether the employee has met or exceeded the standards of care delivery.

The Hospital for Special Surgery instituted merit pay for its physical therapists and social workers, but the system was considered unfair and was dropped after one year. The director of rehab services explained:

There was a merit compensation program at the hospital last year. Bonuses were available according to performance, but the performance appraisal wasn't done right. I was told by the administration to give bonuses to 20 percent of my staff. This year the bonus system was eliminated. Now there will be an across-the-board increase for all who meet a certain standard.

New England Baptist had a merit pay system in place for its physical therapists: a 0 to 4 percent annual pay increase that was based on therapists' self-evaluation. The problem with the system, according to the supervisor, was that it added stress and made ...

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