Valuing Physician Compensation

HealthLeaders Media Council members discuss implications for physician compensation in a value-based purchasing environment.

This article first appeared in the March 2015 issue of HealthLeaders magazine.

Scott D. Hayworth, MD
President and CEO
Mount Kisco (NY) Medical Group

We will have to do a major change in the next two or three years. We are waiting for the carriers to move toward value in our region. At that point we will have to redo our compensation system. For primary care, without a doubt, there will be some money for panel size, some money for seeing the patients or RVUs, some part for quality, value, some part for customer service, and then we reward citizenship as an organization. For the specialists, that is tougher. There will definitely be an RVU component and a value or cost component, citizenship, and customer service. The proportion of all of that will be determined as we get closer and we have a better view of what the world looks like.

We are a physician-owned multi-specialty group of 450 doctors. We prefer not to put people on straight salary. There has to be a substantial component for the right behavior. If it is only a small component, you will not get the behavior you want. Whatever you design with a compensation system, half the people are winners and half are losers. Because of that you have to have multiple meetings, lots of communication, and give people time to absorb it.

Thomas G. Lundquist, MD
Senior Vice President and Chief Medical Officer
Optima Health (Division of Sentara Healthcare)
Virginia Beach, VA

Physician compensation expectations aren't a problem, per se. Rather, physicians in large want to protect how they get paid based on what they know today. So we, as a health system–owned health plan, have to establish trust with providers as we think about paying them. It's not just the health plans supplying cost data and utilization data, but it's sharing that and having the physicians build disease registries and work within their electronic health records and share back with us so that we are having a bidirectional conversation and we are validating each other's data and making each other better.

A big thing we are focusing on is increasing the power of our analytics so we can move the ability to model these new global budgets or capitated population payments so that physicians can see them alongside a fee-for-service model they work under and then eventually pay them the better of the two models and eventually flip it over to the
full population.

As a payer we have to build the trust, show them the data, and then build a transparent payment model where they can see how they are going to win under it. Most important, we as a payer must help them win under these new payment mechanisms—not repeat the 1990s, but rather change the game going forward.

Lewis Marshall, MD
President, Medical Executive Committee
Brookdale Hospital Medical Center
Brooklyn, NY

On building the compensation criteria: The incentive payment will be based upon productivity (relative value units), citizenship, compliance with core measures, and Physician Quality Reporting System measures. The provider who is at 90% on the quality measures will get all of their incentive calculation and based upon RVU times citizenship as some percentage. As the quality measure compliance goes down, you get less and less incentives.

On the balance of volume and value: Value has to be part of the equation. We've been such a volume-driven hospital, both inpatient and outpatient, so it is going to take a little bit of work to get rid of it. We can't just cut it off tomorrow and say, “On January 1 we are no longer going to calculate on volume.” We will come up with some sort of volume calculation because we don't want to see volume drop.

On tailoring compensation: We are looking at tailoring the quality measures to the provider specialty. One issue we identified with volume-based incentives is that pediatricians can see a lot of low-acuity patients and can get a higher incentive if you're just doing a volume-based incentive as opposed to the internist who is spending more time with the more complex patients and having fewer visits. Using the quality measures, the citizenship, and the work RVUs we think will even the playing field so we are not having to make adjustments for particular specialties.

John E. Keelan
CEO
Brodstone Memorial Hospital
Superior, NE

As we grow into this value-based purchasing, with none of us all the way into it yet, we are already ahead of the game because of the way we are arranged now. In 2002 we bought the physician clinic in our little town. We thought at that time that the best way to bring the most comprehensive care to the people we serve at the most reasonable cost was by coming together, and them being able to recruit additional providers as the need arose to have them on hand.

We are still fee-for-service, but it goes into one pot. They get paid for it and we take ours. As we get into value-based purchasing, it will blend in easily for us. It's evolving, but we aren't there yet. I am still looking to see how it's all going to fall into place.

We focus on providing quality care and doing the best we can for our people. But it's going to be hard because the more you force people into value-based care, the more rural hospitals are going to close because they don't have the facilities or the providers to even do what we do now. So you are going to drive providers out of small areas, and I just don't see it working.