Addressing the American Medical Association a few months after taking office in 2009, President Obama said that the U.S. healthcare system “rewards the quantity of care rather than the quality of care.”
That statement, made by the president as he took the first steps toward healthcare reform, is still true of many U.S. insurance plans and healthcare organizations. Though the issue of physician compensation sometimes takes a backseat to more immediate reforms, it remains a pertinent concern in medical establishments across the country.
Payment Models, Payment Worries
How (and how much) a physician is paid is a touchy issue – one many medical administrators would rather not think about. What is the right way to pay a doctor?
“There are a variety of bad ways of paying doctors, but no particularly good ones,” wrote Drs. Steffie Woolhandler and David Himmelstein in a piece for The New York Times. “Fee-for-service health care rewards the overprovision of care; capitation (a set monthly fee per patient) rewards underprovision; and salaries reward just showing up.”
In the day-to-day management of your medical practice, you have little control over how your payers choose to reimburse or contract with the docs treating patients in your office. But you can control whether or not to incentivize the physicians you bring on board, and should weigh that decision carefully before presenting any doctor with a job offer or contract.
Incentives Without Improvements
Healthcare industry experts tend to agree that providing physicians with incentives based on the amount of medical care doled out to patients is, while popular, a sometimes troubling model.
That approach makes it far too easy for a minority of “bad egg” practitioners to spoil the proverbial bunch by ordering extra tests, performing unnecessary procedures and encouraging unwarranted patient encounters.
Patients who are victims of overprovision rarely know it, thinking instead that they’re just getting an acceptably high level of attention and care from their physicians. People often tend to think that “more is better,” but, when it comes to healthcare, more can definitely be worse.
In research on healthcare costs, Dartmouth economists Katherine Baicker and Amitabh Chandra discovered that the more money Medicare spent per person in a U.S. state, the lower its nationwide quality ranking tended to be.
Despite that evidence to the contrary, most provider groups continue to focus on high productivity as a mark of successful practicing.
The data from the HealthLeaders Media Intelligence Report in late 2011 found that four out of five physician compensation models are still tied to productivity measures. Medicare and Medicaid reimbursements were named by 76% of respondents as the top influencing factor of their organization’s physician compensation structure.
Incentives For Improvements
Since fee-for-service remains the predominant model for insurance reimbursement, it can seem only natural to compensate physicians in the same manner. Plus, offering incentives gives an organization bargaining power when it comes to physician recruitment.
But different compensation models, which reward positive patient outcomes and high satisfaction levels, are gaining popularity. In the HealthLeaders Media report, 57 percent of respondents said that they prize quality as an incentive measure. 50 percent are also using patient satisfaction scores to motivate physicians.
These newer approaches allow practices to maintain a competitive, incentivized advantage in today’s physician-short marketplace while avoiding the “more is worse” abuses of the fee-for-service doc payment model.
The growing shift to quality-based incentivizing is largely attributed to the changes surrounding healthcare reform. Technology, though, may also be playing a factor.
At the American Medical Group Association conference in March 2012, physician group leaders discussed how the per-practitioner data analysis enabled by their electronic health record systems not only standardized care delivery, but allowed measurable outcomes to play a factor in compensation structure.
A popular choice among the administrators at AMGA was to also use the patient satisfaction scores measured through tools like those from Press Ganey to distribute tiered bonuses to physicians.
Looking Toward the Future
Whether you choose to compensate your physicians based on satisfaction or not, it’s a wise decision to get comfortable with the idea. As Power Your Practice reported recently, office-based doctors will soon be subject to the same RVU structures as hospitalist physicians.
Projections on physician compensation also point to the advent of the Accountable Care Model, which places physicians on salary, as an indicator of changing payment trends. Will that soon be viewed as rewarding more than just “showing up?” Only time will tell.
While it may seem that there are “no particularly good” ways to pay doctors, there are certainly a multitude of options – and expectations that accompany them – available to choose from. It’s up to you to decide what incentives are right for your practice, your patients, and your physicians.
How does your practice handle physician compensation?
