The way physicians are paid is an ongoing discussion in healthcare reform. But if you think changing physician compensation models is simply about how much money doctors are paid, think again. New compensation models are about changing how doctors practice and how they allocate their resources.
Consider physician turnover. Compensation is the primary reason physicians leave practices and healthcare groups, and studies have shown that it costs more to replace a physician who leaves than it does to pay their salaries. It’s also common for physicians to take patients with them, which means replacement physicians may need two or three years to make any real contribution to a medical group’s overhead. Physician recruiters know departing physicians can also be a red flag for the candidates they are trying to recruit.
Most healthcare pundits think the way doctors are compensated is outmoded and obsolete – it doesn’t help the patient or the caregiver. In 2013, Matthew Moeller, MD wrote a letter to our leaders in Washington DC to illustrate that doctors are not represented when healthcare laws are made. He writes, “Many of the loudest voices in the healthcare debate are those of lawyers and lobbyists for special interest. They do not care about the wellbeing of patients; that is what doctors do.”
Take incentive-based compensation for physicians. It’s not a new idea, nor is it simply about allowing physicians to earn more money. It’s about delivering better care for more people, and doing it at a lower cost. Physician recruiters know candidates aren’t only interested in making a good salary. Sure, compensation is a key source of physician satisfaction, but it’s also a key source of physician dissatisfaction.
What’s apparent from the physicians we work with is the idea that their satisfaction is almost exclusively about patient care. Constant regulatory changes, heavy workloads, and other bureaucratic headaches do not derail most physicians from the sheer gratification they get treating people. So, when it comes to changing compensation models, physicians look to redesigning patient care.
Many argue that a shift away from traditional fee-for-service (rates that are modeled on Medicare’s 15-year-old Resource-Based Relative Value Scale) model toward a system based on quality is needed, because the pure fee-for-service model isn’t sustainable. That’s because the more physicians investigate, test, and intervene, the more financial rewards potentially exist. It doesn’t account for whether (or not) certain tests are actually needed. And it doesn’t put the right focus on preventive medicine and wellness.
Incentive-based compensation models typically reward physicians based on one or two behaviors: generating a higher volume of gross billings or net collections, and/or seeing a higher volume of patients. So, subjective criteria are being applied to many physician incentive models to encourage doctors to work well in a collaborative environment and provide high-quality care and a positive patient experience. This also entails an increasing focus on the overall patient experience.
All evidence points to the fact that we need a major paradigm shift in physician compensation. Deepak Chopra says, “It needs to be more prevention-based and centered around holistic care. And it’s going to happen in the next couple of years...if this doesn’t happen, the current system will bankrupt this country.” Unfortunately, how and when that change will manifest itself as the norm is yet to be seen.
It should be noted, compensation reform isn’t only happening in large American cities, either. Health systems and hospitals in smaller communities are under the same pressure as organizations in large cities to tailor physician compensation packages that recruit and retain doctors.
The debate continues about how physicians should be compensated and will continue for quite some time. You should know the pros and cons of the compensation you are offering to your candidates and provide them with a clear description of what they need to know – while highlighting the pros as much as possible. And like we said, physicians aren’t only interested in compensation; make sure you use your job description to show them the type of physician they can become at your organization. For tips on the best way to compose your Job Posts, take a look at our blog post on the subject.