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Physician Compensation Incentives Shifting

Karen Minich-Pourshadi, for HealthLeaders Media, October 28, 2011
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Salary plus incentive, along with productivity-based models are the dominant compensation structures (40% and 34% respectively), according to the survey; 14% of physicians are earning straight salaries. Healthcare leaders say this may be due to the shift toward an ACO care model in which physicians are put on salary to allow them to focus on quality of care over volume. However,it may also be the result of patient volume issues.

“There are certain specialty areas where hospitals need the coverage; however, there may not be enough patient volume to use a productivity model, so they may offer straight salary in order to retain those services,” explains Suzanne Anderson, senior vice president, CIO, and CFO for Virginia Mason Medical Center in Seattle. The nonprofit, integrated health system includes a multispecialty group practice of more than 440 employed physicians and a 336-licensed-bed acute care hospital.

With the fee-for-service reimbursement model still firmly in place at hospitals nationwide, it’s not surprising that productivity ranks highest (75%) as a compensation model incentive or that work relative value units dominate as the productivity measure (66%). However, 57% of respondents now prize quality as an incentive measure, and another 50% are also using patient satisfaction scores to motivate physicians.

Five years ago, our sources agree, those last two measures wouldn’t have seen such high percentages. The shift toward incentivizing for quality and patient experience are likely tied to healthcare reform, which is causing healthcare leaders to reassess the carrots and sticks used to motivate doctors. But, as fee-for-service is replaced by pay for performance, could productivity incentives go by the wayside?

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