Healthcare Business News

Shift from fee-for-service payment model may not be easy, report finds

By Andis Robeznieks
Posted: January 29, 2014 - 1:00 pm ET

The federal government is pushing the healthcare industry to move away from fee-for-service, but that payment model may be too entrenched to do so easily, a new report indicates.

Compensation for almost a third of all physicians currently is based primarily on personal productivity, which may incentivize volume over value, according to a report from the American Medical Association.

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“This suggests that it may be difficult to align practice-level incentives that encourage judicious use of resources with physician-level incentives that do not,” concluded the report, which was written by Carol Kane, senior economist with the AMA. “Changed incentives at the practice level may be felt differently at the physician level depending on what compensation methods are in place.”

For today's doctor, the word “salaried” is not synonymous with “employed” as nearly half of the physician workforce relies on two or more revenue streams in their income, Kane noted. While 51.8% reported just one revenue stream, which was usually salary or personal productivity-based compensation, 30.3% reported having two payment methods, 13.2% said they had three, and 4.7% had four.

For all physicians, 20% reported that their salary was their only source of compensation, while 33.1% said salary composed the largest percentage of their compensation but it was not 100%. Also, 21.7% said all of their compensation was based on personal productivity, while 10.1% said it was the largest part of their payment but it was not 100%.

For 7.6%, 100% of their compensation was based on the financial performance of the practice and for 3.6% it was the largest segment of their compensation but not all of it. Physicians in single-specialty practices accounted for the largest share of this group and accounted for 10.9% and 6.8%, respectively, of the doctors in the two categories.

For employed physicians, 32% reported that 100% of their compensation came from their salary, while 40.7% said salary was the largest portion. Also, 16.3% of employed physicians reported that all of their compensation was based on personal productivity, while 5.8% said productivity accounted for the biggest percentage of their pay but it was not 100%.

The report is based on an online survey completed by 3,466 physicians between November and December 2012. Invitations to participate were sent to 14,750 doctors not employed by the federal government and there was a response rate of 28%.

Follow Andis Robeznieks on Twitter: @MHARobeznieks

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