Core Leadership Competencies

Business of Medicine

Successfully leads strategy design and operations and fiscal management of endeavors across all missions

Attributes  |  Assessment Questions  |  FAQ  |  Pediatric Leadership Insights  |  Additional Resources


    • Clearly articulated strategic plan
    • Demonstrated understanding and utilization of:
      – Financial statements e.g., Balance Sheet, Profit and Loss (P&L), Statements of Cash Flows, etc.
      – Funds flow mechanisms and measures
      – Compensation and productivity models, e.g., Pay for Performance (P4P), wRVU values
      – Legal and HR documents and requirements
      – Institutional financial reconciliation/reporting standard practice guidelines and requirements
    • Demonstrated operations transparency
    • Effective management of clinical productivity and reimbursement models

Assessment Questions

  • Do you understand your organizational funds flow and financial reporting?
  • Have you developed disciplined financial planning to ensure you will reach your strategic objectives/priorities?
  • Does your program have an established written strategic plan and priorities? Are those priorities aligned with those of the hospital, the department/medical school? Are the strategic plan and priorities widely understood and incorporated into local decision-making and actions?
  • Do you have access to knowledgeable business administrative staff to assist you in all aspects of your financial operations/accountability?
  • Do you have committed financial resources to match the established priorities?
  • What percentage completion would you ascribe to successes in achieving the established strategic priorities?
  • Is your program recognized as the market leader for clinical services? What five things could you do to increase market share?
  • Are your revenue and expenses aligned to your strategic objectives/priorities?
  • Do you have a transparent funds flow that aligns to the strategic objectives/priorities of your program?
  • What percentile are you currently achieving for the business operations metrics established for your program?
  • Do you have an established process for the continual evaluation of the fiscal and operational matters for your program?
  • Are your faculty currently compensated at the 50% of AAAP?


Do you understand your institutional funds flow?

One of the most effective actions a new leader can take is to learn the funds flow of the organization and develop relationship with those leaders (e.g. CFO, CEO, COO etc.) who oversee these responsibilities. To facilitate this learning, we have encouraged new division chiefs, chairs to proactively set up meetings with all officers in key roles of responsibility around financial operations and funds flow. These meetings can provide critical insight into the nuances of the institutions committee structure and decision-making processes. They are also important opportunities to meet and develop relationships within the organization that could/will be critical over the tenure of your appointment.

Have you developed principles to guide the choice of your compensation plan & guidelines?

There are a variety of compensation approaches used in medicine from fixed to 100% variable and those that are a combination of a fixed (guaranteed approach with an earned/variable/’at risk’ component. There are several key recommendations we believe are critical to the success of any compensation plan:

  1. Compensation (faculty and staff) should be tied to the best available market data.
  2. Performance expectations should be clearly defined.
  3. Incentives should be tied to organizational objectives and goals.
  4. Incentives should be provided by productivity beyond a minimum.
  5. The rules and specifics of the program should be transparent and written.
  6. Administration and leaders must be knowledgeable and available to assist.
  7. Feedback on performance should be timely so adaptations can be made.
  8. Changes to compensation should be implemented in a time frame that allows faculty to adapt.
  9. Administer with fairness and consistency.
  10. Plan for amendments.


What are some common pitfalls in setting up a compensation plan?

If a compensation plan becomes too complicated it may be difficult to understand and thereby loses the ability to incent the desired behavior. There is probably a fair amount of truth to the saying that if a faculty member can’t explain the plan to their partner or close friend in a few minutes it is probably too complicated.

The results of the program should be closely monitored periodically.  A faculty member who is not fitting into the overall academic character of the department may need to have their incentives reevaluated.  An example might be a highly productive clinical member who is maximizing income and not paying attention to educational responsibilities.

All activities of the faculty do not need to be covered by the plan.  An example might be administrative positions such as Vice chairs of education, research or clinical affairs and even Division Chief activities may be covered by specific agreements (% effort).  Some of these activities may have specific goals and incentives tied to their performance, however these types of incentives should be minimized to keep the plans as simple as possible.

Certain type of behavior should be expected before incentives are paid out for high productivity.  These so-called openers might include such things as quality measures, patient satisfaction, or evaluation of teaching performance.

What are some common difficulties in setting up benchmarks or guidelines for faculty salaries and productivity?

It is not uncommon to find various societies or groups publish salaries and productivity benchmarks for faculty by discipline. It is important to become knowledgeable on how these data sources were collected as they may vary significantly. There may be differences in how the data was collected that may make them difficult to compare. Some maybe more granular in how they define subspecialties. An example may include procedural cardiologists with different benchmarks than non-procedural pediatric cardiologists. It is possible you may need to use combinations of several sources to come up with what is a fair and equitable benchmark for compensation or productivity.

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Additional Resources


  1. Lakshminrusimha S, al. “Funds Flow” Implementation at Academic Health Centers: Unique Challenges to Pediatric Departments. J Pediatr 2022 Oct;249:6-10e4. doi: 10.1016/j.peds.22022.01.058
  2. Kerschner JE, Hedges JR, Antman K, Abraham E, Negron EC, Jameson JL. Recommendations to Sustain the Academic Mission Ecosystem at U.S. Medical Schools. Acad Med. 2018 July; 93(7):985-989. doi:10.1097/ACM.0000000000002212
  3. Andreae MC, Freed GL. Using a productivity-based physician compensation program at an academic health center: a case study. Acad Med 2002 Sep;77(9):894-9.doi.10.1097/00001888-2002090000-00019.
  4. Spahlinger DA, Pai C-W, Waldinger MB, Billi JE, Wicha MS. New organizational funds flow models for an academic cancer center. Acad Med. 2004 Jul;79(7):623-7.doi:10.1097/000018888-200407000-00003.
  5. Satyan Lakshminrusimha, Steven L. Olsen, David A. Lubarsky. Behavioral economics in neonatology–balancing provider wellness and departmental finances. Journal of Perinatology. 2022.


      1. Arthur M. Feldman. Pursuing Excellence in Healthcare: Preserving America’s Academic Medical Centers. ISBN-13:978-1439816578, ISBN-10: 1439816573
      2. AAMC Funds Flow: What you need to know.