What performance-based compensation means for physician candidates

Posted by Doximity TF Team

patient-satisfaction_smHealthcare reform is changing the landscape of medicine and physician recruitment. Under the Affordable Care Act, a new Patient’s Bill of Rights “gives the American people the stability and flexibility they need to make informed choices about their health.” The Affordable Care Act is also changing the way physicians are paid—there’s now a major shift toward performance-based, or value-based, compensation.

Medicare and commercial payers are aggressively moving to pay-for-performance contracts, which means hospitals and healthcare organizations are now working those concepts into how they pay their physicians. In other words, they’re adjusting their physician compensation plans from “volume of care delivered” to “performance-based metrics” like quality and patient satisfaction.

Yes, physician pay for patient satisfaction—not an easy thing to gauge, but a factor for physician compensation trends nonetheless. Clearly, physician compensation depends on a lot of other factors, too, as Doximity discovered with their launch of Career Navigator, e.g., rural communities tend to pay more than large cities, and pay for certain specialties fluctuates drastically from state to state. While Career Navigator means physicians can now see what they’re earning relative to their peers across the U.S., value-based compensation is a whole other beast.

Thus far, performance-based pay is more prevalent in primary care than in subspecialties, but productivity-type incentives are employed much more frequently (and increasingly) at hospital-employed settings. An article from the Journal of the American Medical Association (JAMA) argues that primary care physicians, in particular, should be thought of as CEOs responsible for $10 million in annual revenue—and that physicians should be accountable for the overall quality and costs in health systems as senior executives are in other organizations.

Elsevier B.V., an academic publishing company that publishes medical and scientific literature, suggests that physicians generally have far less compensation at risk than senior executives in other industries. In fact, most organizations have less than 10% of total compensation at risk. Their study of senior executives at 10 leading health systems, which was conducted to better understand how organizations use performance-based compensation, provides data on the types of Relative Value Units (RVSs) that are tied to performance-adjusted salaries, including patient experience, teamwork, education, research, population management and more. Incidentally, of the 10 organizations interviewed, five pay physicians using productivity-independent salaries and five use productivity-adjusted salaries. At the Cleveland Clinic and Mayo Clinic, for example, physicians are 100% salaried—physician pay is not based on quality factors.

There’s obviously no one-size-fits-all model for physician compensation, but combining volume and quality for payment is definitely seeing forward movement and experts say the number of physicians whose compensation is being tied to value incentives is increasing. A 2012 Physicians Practice survey showed that one-third of respondents said that at least 20 percent of their income is not guaranteed but dependent on metrics, such as patient satisfaction.

So what can physician candidates expect and how do physician recruiters help candidates understand the new compensation models? Indicators of quality, patient satisfaction, patient engagement, and good physician citizenship—and even factors including reduced readmission rates, shorter lengths of stay, and participation in system-wide quality assurance initiatives—may well be determining factors for physicians.

We recommend you get familiar with RVUs like these ten recommendations from Merritt Hawkins. Ardis Hoven, MD, chair of the AMA’s board of trustees, also urges physicians to educate themselves about current payment systems and participate in reform developments. “The AMA will continue to provide physicians with information and educational resources on evolving payment and delivery models that aim to optimize quality patient care,” says Dr. Hoven.

A growing number of physicians are moving away from independent practice. In fact, more than half of physicians (52.6%) are now employed by a hospital or medical group. That means many of your physician candidates may ultimately be required to convert to compensation based on individual productivity. Are you recruiting for facilities that offer performance bonuses? Make sure your physician candidates are staying educated on compensation trends (physicians can use Doximity’s Career Navigator as a resource) and let us know how performance-based models are affecting your success.

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Topics: Physician compensation, Performance-based compensation, evolving payment models, physician pay for patient satisfaction, healthcare reform, pay-for-performance contracts

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