In managed care, physician compensation should ideally be based on efficiency, says Deborah Walker, a consultant based in Surfside, Calif., who works with Denver-based MGMA Health Care Consulting Group.
In her MGMA program "Physician compensation and productivity: Moving from volume-based to efficiency-based indicators," at 11: 15 a.m. Wednesday, Oct. 20, Walker will discuss the advantages and disadvantages of various compensation models and ways for medical practices to develop a physician incentive compensation model that is consistent with managed-care and practice goals. Her discussion is based on a chapter she contributed to the book Physician Compensation Systems.
Efficiency-based compensation supports a group practice mindset by reducing inefficient, outlier behavior and aligning compensation with managed-care goals for resource utilization and cost, patient access and satisfaction, and clinical outcomes, quality and productivity, Walker says.
"The entire group can focus on common goals," she says. "Aligning physician compensation with cost, quality and service dimensions will help position the practice well when it takes on risk contracting and managed care."
Efficiency-based models have disadvantages, though. Measurement systems make salary administration more complex, and the level of incentive may be inappropriate and may not cause behavior to change, Walker says.
To reduce complexity, practices should choose fewer than five performance measures, such as resource utilization and cost of care, leadership and collegiality, patient access and satisfaction, clinical outcomes and quality, and clinical productivity. Medical groups should analyze productivity in relative value units, so that surgeons and interns can be compared based on their work effort rather than gross charges and net collections.
To motivate behavior, the chosen performance measures must be well understood and aligned with the medical group's values.
For example, if the group aims to serve the underinsured, it shouldn't reward or penalize physicians based on payer mix.
In developing the model, groups should seek legal counsel, consider financial effects and involve physician leadership.
Walker will discuss examples to illustrate various "base plus incentive" compensation plans.
"I don't want it to sound as if there's one right answer," she says. "Many medical groups are struggling with this process now. Developing the plan and the product are equally important."