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Physician Compensation Models Are Upside Down

Joe Cantlupe, for HealthLeaders Media, July 11, 2013

The Dean Clinic has navigated through tough waters toward a value-based physician compensation model. It is an outlier. More commonly, physician and hospital contracts are top-heavy with volume, not value, a physician recruiter says.

Although we are supposedly moving toward a value-based provider compensation model, many hospitals are struggling toward developing such programs, while others continue to develop contracts with physicians relying heavily on how much volume the doctors are generating.

That's not the way it is supposed to be.

"We need to get past the schizophrenia and need to take a leap," says Craig Samitt, MD, MBA, president and CEO of the Madison, Wisconsin-based Dean Clinic discussing the trials and tribulations of establishing a compensation model for physicians based on value, rather than fee for service.

Last month, Samitt, who heads one of the largest integrated delivery models in the Midwest, spoke at the National Accountable Care Organization Summit in Washington D.C., and noted that physicians often are not truly engaged in developing these compensation models. As hospitals and doctors evaluate data for compensation, it is "like going through the grieving process," Samitt said. That includes denial ("My patients love me. The data must be wrong") to depression ("My patients hate me") to acceptance ("OK.")

Sometimes, he says, hospital leaders themselves feel like grieving.

Samitt recalled how, years ago when he was COO of the Fallon Clinic, there was a physician rebellion at the prospect of cultural and organizational changes. "A group of doctors told me, 'if you don't stop this, we will fire you as the chief operating officer of our organization,'" he recalls.

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