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Physician Compensation Incentives Shifting

Karen Minich-Pourshadi, for HealthLeaders Media, October 28, 2011
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But now key initiatives on leaders’ priority lists are no longer organization-driven but tied to mandates that affect future reimbursements for the organization—such as value-based care incentives for quality and patient satisfaction. Physician insight is now crucial to the success of these programs and the overall financial health of the organization.

The shift in priorities has caused administrators to call on as much as 10%–15% of the physician’s time, Limbocker says, and “that materially cuts into the physician’s schedule, thus the need to reimburse them for that amount of time needs to be considered.”

Though quality, patient experience, and administrative time are being factored into compensation models, it doesn’t mean that physicians will see large pay hikes in 2012. Just 6% of respondents expect to give pay increases of 10%–20%, while 65% of physicians will likely see their paychecks stay the same or have a moderate cost-of-living increase of 1%–4%, according to survey respondents. On the flip side, 4% of respondents expect to have compensation decreases of 1%–4%. About one of five physicians will see a 5%–9% compensation increase, a boost that report advisors say may be the result of practice acquisition “catch-up,” physician demand, or market conditions.

“Right now primary care doctors, under healthcare reform, will be the most valuable asset we have because we need them for an ACO to work … They are a huge asset for an organization, but there is a shortage of them nationwide. It’s the law of supply and demand, and their salaries will reflect it,” says Kaplan. He notes that when hospitals compete to acquire a practice, compensation levels go up. To maintain parity with previously acquired practices, hospitals may adjust the compensation levels of the other physicians within the same specialty.

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