Feb 1, 2021

Compensation Methodology Best Practices: True-Up Payments



It is common during the initial stages of our implementation process for our conversations to involve best practices for managing and automating various models of compensation. Many times, clients are following a methodology that was their best option without automation, but may require an upgrade with the implementation of automation.

In this ‘Compensation Methodology Best Practices’ series, we’ll highlight common compensation methodologies we see, and best practices around those methodologies. 

The Infrequent True-Up

Our team has seen time and again when working with prospects and new clients that they have established their compensation methodology to be a year end true-up – or they’re running true-ups on an infrequent scale or timeframe. 

This practice can create big problems for large health systems.

Year end – or infrequent – true-ups tend to be incredibly inefficient because organizations often end up owing each provider a large sum of money. As a result, organizations are unable to forecast effectively and outpay of cash is unpredictable.

True-Up Best Practices (and the Compensation Conundrum)

The idea we present in a previous post of the healthcare “compensation conundrum” makes it understandable why organizations are truing up so infrequently. 

Most health systems choose this model because it is less complicated and less burdensome on the operations team to calculate true-ups on an annual basis. Without technology, individuals are manually updating these numbers, making it nearly impossible to keep that up on a frequent, routine basis for thousands of providers. 

However, you want your organization to get to a point where you have the ability to forecast accurately and control your cash flow more effectively. In order to do that, truing up more frequently is really the logical answer and the more efficient methodology.

Unfortunately, this option is a distant dream for organizations who aren’t leveraging technology. 

For this reason, a provider compensation automation platform like ProCARE is critical to the success of operational teams and organizations. ProCARE empowers health organizations to offload the manual burdens associated with compensation management, increase accuracy and efficiency of payments and better inform compensation decisions. Enabling organizations to true-up more frequently, enhance forecasting abilities and better manage cash flow.

As the graphic below illustrates, our clients see a dramatic improvement in cash flow and forecasting, when shifting from an annual ‘year to date’ true-up to a ‘rolling 12 month’ true-up.

Are you ready to eliminate the burden of manual processes, human errors and disparate data? Schedule a 15-minute Introductory Call with the ProCARE team to uncover your primary comp management challenges, identify opportunities to automate & optimize your processes and schedule a demo of our platform. Get started today!


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