Changing Incentives for Physician Compensation

Physician compensation models have been taking new shape with the various changes and upheavals going through the health care industry. According to a report by HealthLeaders Media, patient satisfaction and quality metrics are now the main ways health leaders are determining payments.

Half of the respondents to the Physician Compensation: Shifting Incentives report are using patient satisfaction scores, while 57% are using quality metrics as part of their incentive plans.

The dominant compensation structures are salary plus incentive (40%) and productivity-based models (34%). In addition, 14% of physicians are earning a straight salary. According to the report, the last model could be a result of Accountable Care Organizations, where physicians are paid a salary so they can focus on quality over quantity.

Three-fourths named Medicare and Medicaid reimbursements as the top influence on their compensations structures.

“As Medicare goes, so oftentimes, goes the commercial payer — physician rates generally change not long after,” Jeffrey D. Limbocker, chief financial officer of Our Lady of the Lake Regional Medical Center in Baton Rouge, La., and lead advisor for this report, said in a statement. “So people will make tweaks to their compensation models to be ready for the future.”

Other top concerns were health care reform (59%), market competition (49%) and the local economy (38%).

The report suggests that because of government mandates, compensation models are being reviewed more frequently, and 41% change the models every year or two.