More than half of job-seeking physicians land on a hospital's payroll these days, but the best compensation model to create a mutually beneficial relationship is not yet a settled matter.
Many health systems use incentives to ensure that physicians are working on the system's priorities. At physician-led Geisinger Health System in Danville, Pa., for example, 20 percent of physician pay is tied to performance, including quality of care measures.
But Geisinger is unusual in including quality measures in its compensation formula. Although public and private payers are emphasizing value — high quality care delivered efficiently — few health systems are using bonuses to reward physicians for hitting quality or cost benchmarks, according to Merritt Hawkins' 2011 Review of Physician Recruiting Incentives.
Its review of 2,660 physician recruiting assignments in the year that ended March 31 found that more than 90 percent of searches featured bonuses for productivity, but less than 7 percent offered incentives for meeting quality or cost objectives.
Of those hospitals that use quality and cost bonuses, the percentage of total compensation is so small and tied to such subjective measures that it is not yet possible to tell whether financial incentives influence physicians' practice habits, says Travis Singleton, senior vice president at Merritt Hawkins.
"It's not that (hospitals) disagree with the theory; it's that they can't decide what these different metrics are," he says. "And until we get to that point, I think trying to tie that in to a compensation formula is going to be a moot point."
John R. Combes, M.D., president of the Center for Healthcare Governance, an affiliate of the American Hospital Association, says some health systems financially reward physicians who comply with guidelines for chronic disease management or other standards of care, while some use patient satisfaction scores to help determine physician pay.
In those cases, quality and patient experience measures influence only about 5 percent of a physician's income. But he expects that to change by the time the federal government fully implements the coming penalties associated with avoidable readmissions and various measures associated with value-based purchasing.
"Given how hospitals are going to be penalized for hospital-acquired conditions and other things, I think we are going to see that change quite rapidly," he says. "We will have better adoption of quality standards that impact the total compensation package … or we are going to take a big hit if we can't demonstrate improved outcomes."