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Physicians' Performance-based Incentive Plans Increasing

John Commins, for HealthLeaders Media, September 17, 2010

Annual performance-based incentive plans are growing for physicians in both presence and scale, according to consultants Hay Group's 2010 Physician Compensation Survey.

The survey found that 92% of group-based organizations offer incentive plans to their physicians, up from 75% in 2009. 

Physician incentive plans are also being offered by 63% of hospitals this year, as opposed to 51% in 2009. The percentage of integrated health systems offering physician incentive plans remained steady between 2009 and 2010 at 67%. Of the 28 organizations that responded that they had no physician incentive plans, 39% said they were considering them.

"There is safety in numbers, and it has never been truer in healthcare than it is now," says CJ Bolster, national director for Hay Group's healthcare practice. "Integrated health systems have scale and they can offer job security in lieu of having to offer higher incentives. Group practices that are not directly tied to a hospital or system will traverse a bumpier road in the post-reform era, but they will continue to attract physicians with an entrepreneurial drive and an acceptance of risk."

The incentive plans are also increasingly tied to performance measures, with patient satisfaction and quality the leading factors for all surveyed organizations.  Fifty percent of group-based practices tie incentives to patient satisfaction and quality; that percentage is slightly lower for hospital-based (43%) and IHS-based (46%) organizations.

"No one should be surprised that healthcare organizations are moving to link pay to performance," says Ron Seifert, executive compensation practice leader for Hay Group's healthcare practice. "Hospitals will increasingly be rated on performance metrics such as patient satisfaction, readmissions and clinical outcomes, and reimbursements are likely to be linked to these as well. Financially, it's in an organization's best interest to embrace these changes now, rather than waiting for all the reform dust to settle. Communally, a hospital focusing on the needs and health of patients is good for everyone."

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