New Physician Pay Models Must Reward Quality, Outcomes

John Commins, for HealthLeaders Media , January 27, 2014

Brokaw describes three phases in the process of transforming from fee-for-service to value-based compensation, all of which involve the move away from base salaries and towards increased incentives or risks. "In the introductory phase the majority of the revenue is still coming from the fee-for-service billing and low productivity from one provider doesn't directly impact other providers," he says.

"Pure procedure compensation models become problematic as organizations take on increasing amounts of risk. In the middle, as we look at the different models, what stands out is activities that once were profitable have the potential to negatively impact reimbursement reimbursements in the future. As we put our focus on readmissions and outcomes we need to keep that in mind."

"Finally, as we move to the population health phase, per patient per month and patient management and wellness are the keys to driving this. Your physicians have to be motivated to accept this risk. Productivity models needs to align with the objectives of the population that we are now managing."

Brokaw says a typical compensation model he's seeing now offers 80% base pay and 20% incentive, a ratio that will undoubtedly change as healthcare reimbursements evolve toward risk.

"The incentive side is in aligning this with the organizational cultures and behaviors we want to drive, based around quality patient satisfaction, alignment with our objectives, developing that culture, and citizenship," he says.

"As you think about those different buckets and creating the culture collaboration and transparency and how do you move to a model where all of your physicians are involved and they are working with each other to better their performance, you have to move away from an individual-based model and move to one that takes things into different accounts in different areas."

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