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Medical Director Compensation Increasingly Tied to Value, Quality

 |  By John Commins  
   May 03, 2013

As healthcare delivery moves toward value-based reimbursements, medical directors at physician practices are increasingly shouldering duties tied to monitoring quality metrics such as patient safety and satisfaction, a new survey from the Medical Group Management Association shows.

"As we understand the industry is moving towards a value-based reimbursement model we are seeing that permeate and migrate into compensation methodologies as well, for many good reasons, " says Todd B. Evenson, director of data solutions for Englewood, CO-based MGMA.

The survey found that 40% of medical directors report duties that include monitoring quality metrics.

"It is a strong tactic for many organizations to align compensation methodologies with reimbursement methodologies, " Evenson says. " As we look toward the value-based environment, obviously quality and cost are the two biggest components in that equation. We have a snapshot in time with this survey, and my expectation is that it would continue to evolve as the industry moves closer towards more providers getting paid based on value versus a production level. "

The survey includes responses from 1,422 medical directors in 239 medical organizations, including 142 single-specialty practices and 97 multispecialty groups from all across the nation. Among the respondents,

  • 54% worked in physician-owned practices
  • 27% worked in hospital- or integrated delivery system-owned practices
  • 17% were in some other ownership model

Evenson says this shifting dynamic will also require a new relationship between medical directors and practice administrators. " It is probably more important now than ever to have a strong physician administrator team and have a strong understanding of a common goal, " he says.

"In the past if it was production, we focused on patient flow and efficiencies in the practice. But in the new environment it is delivering value and clinical quality. There is going to have to be a movement within the organization to ensure there are harmonized activities and that the practice can deliver the greatest quality possible. "

Compensation and time allotted for medical director duties appears to vary depending upon the ownership of the physician group. Respondents in this survey tended to represent medical directors working in physician-owned practices, where Evenson says " the preponderance of their activities will still be in that clinically based care because they are delivering face-to-face contact with patients. "

"The preponderance of what they are earning is going to be in the space of their traditional compensation model of production. With that being said, on the side of the medical directorship there is a very different modes for how they are being compensated, " he says.

The MGMA survey focuses on medical directors who spend six hour or less on their directorship or administrative roles. " For the primary care folks, for example, about 35% of them are paid at an hourly rate, about 40% are paid at a monthly rate, and 23% are paid at an annual rate in this survey, " Evenson says.

"How they are being reimbursed or compensated is a function of their looking at the clinical aspects of the practice, whether that is patient satisfaction metrics, the quality metrics, " Evenson says.

"That might even be provider and staff satisfaction as well. They are working with a team of physicians to develop policies and guidelines for delivering the care in their organizations. That is really where we are seeing these folks fitting in in terms of how they are being compensated. "

While the roles appear to be same for medical directors at physician-owned practices and hospital-owned practices, Evenson says the biggest difference is the amount of time dedicated to the directorship duties.

"In a hospital, they would spend more time on the directorship role with an annualized amount of compensation as being one of the leaders in the health system, " he says. " They would be directing that clinical care across a multitude of physicians whereas in a smaller single specialty practice the amount of time that can be spent on that is dramatically reduced. "

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

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