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4 Physician Compensation Factors to Watch

Analysis  |  By Debra Shute  
   January 04, 2018

Determining how to pay doctors in various markets and specialties has become more nuanced than ever.

Physician compensation was already complex before the healthcare industry began its protracted shift from volume to value.

A recent survey produced by Integrated Healthcare Strategies, a division of Gallagher Benefit Services, looks at how healthcare organizations are updating their physician pay practices to reflect an evolving reimbursement climate.

Aurora Young, a managing director in the physician services practice of Integrated Healthcare Strategies, gives her take on the survey data and market trends. Here are four takeaways.

1. Medians are becoming less meaningful

While national survey data remains the foremost factor in physician pay practices across specialties, it's far from the only factor at play. More local variables such as payer reimbursement, clinician supply and demand, and the prominence of quality incentives (which may be offered as carve-outs or additional earnings) make arriving at an offer decidedly more complex.

In surgical specialties, for example, productivity-based payment rates are determined by national survey data (85%), regional survey data (42%), local market norms (38%), financial affordability (37%), and negotiated rates (18%), according to the survey, which allowed participants to select multiple production metrics.

"Local factors mean that not all organizations can afford to pay at the median," says Young. "They're being more nuanced than in the past. They're not just opening a book, pointing to the median, and saying, 'That's what we'll pay.' "

2. The move to value isn't as slow as it looks

Consistent with other national survey data, healthcare organizations are tying a rough average of 10% of physician compensation to quality or value-based incentives.

Debra Shute is the Senior Physicians Editor for HealthLeaders Media.

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