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Insight Report: Three Keys to Solving Physician Compensation Challenges

By Debra Shute  
   March 16, 2017

Leaders attending the inaugural HealthLeaders Physician Organization Exchange shared their guiding principles for managing the most challenging element of medical practice finances.

How much financial incentive or risk does it take to influence physician behavior? What's the best way to update compensation plans? How do leaders give physicians annual raises in the face of rising inflation and flat reimbursement rates? And how can they expect to retain good physicians without adequate compensation?

These are just some of the questions addressed at HealthLeaders' inaugural Physician Organization Exchange, a gathering of nearly two dozen invited senior executives in La Jolla, CA, in December 2016.

There are no universal answers, but there are some common themes to keep in mind.

1. Create a Quality-focused Culture
The first step in achieving physician alignment with organizational value-based goals isn't immediately tying metrics to incentives, but creating a quality-focused culture.

"If [achieving value] is just dependent on the money, it won't work in the end anyway," said Mitchell Schwartz, MD, chief medical officer and president of Anne Arundel Medical Center's Physician Enterprise, LLC, in Annapolis, MD.

"Money doesn't tell the whole story. It's really about the why. Is this really good care? Why are we doing such and such? Money only opens the door to the discussion," he said.

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When money does inevitably come into play, Schwartz emphasized some keys to making it meaningful. "We're going to have to add a lot more transparency, like we've seen with patient satisfaction," he said. "And if it's going to be just a small amount of money, it won't have an impact."

2. Bind Rewards to Feedback
Furthermore, it's not just the amount of money that helps drive alignment, but also the way it's connected to clear and timely feedback, noted Mark L. Wagar, president of Heritage Medical Systems, a Palm Springs, CA-based affiliate of the Heritage Provider Network.

Debra Shute is the Senior Physicians Editor for HealthLeaders Media.

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