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Welcome to our PhysicianTrends Blog.  We're here to talk about physicians and how they are changing in the midst of the most massive transformation in our healthcare system since Medicare.
Tuesday, 14 June 2011
DG Comfort

Physician Compensation Reality

Written by  DG Comfort

There has been a lot of talk recently about outcome based healthcare coming out of Washington as a way to sell the Patient Protection and Affordable Care Act (PPACA).  The proponents of the PPACA claim that when the new law is fully implemented the quality of healthcare will go up while the cost will go down.  One of the plans touted through the PPACA is Accountable Care Organizations (ACO’s) where hospital and doctor groups are rewarded for decreasing Medicare and Medicaid costs, while improving overall patient satisfaction.

But, the reality of how hospitals recruit and compensate doctors tells an entirely different story.  A recent Wall Street Journal article reported the results of a new study by Merritt Hawkins.  The study reveals that physicians are compensated for patient volume and not quality, a trend that has administration officials dismayed at current recruitment and compensation approaches.  Specifically, 74% of recruited jobs offer performance bonuses. Despite initiatives to reward doctors and hospitals improvements in quality of care, 90 percent of those recruited jobs offer compensation for "fee-for-service style volume," according to the "2011 Review of Physician Recruiting Incentives" study. Only 7 percent of jobs offer bonuses for quality or cost reduction objectives.

The researchers also noted that signing bonuses are a commonly-used incentive (and expectation) of potential physician candidates. 76% of recruited jobs offer a signing bonus, estimated at an average of $23,790, up from $22,915 in the previous year."  Signing bonuses have gone from carrot at the end of the stick to an expected part of the package," said Travis Singleton, senior vice president for Merritt Hawkins. "It's an extreme negative these days if you don't have a signing bonus."  Other recruitment incentives include loan repayment (12 percent) and housing allowance (6 percent).

The Merritt Hawkins study also quotes HealthLeaders Media claiming that one in two physician job openings are currently in hospitals. 

 What does this mean to doctor in private practice?

 A lot of forces are coming together to make it more and more difficult for a doctor to start or remain in private practice.  ACO’s are required by law to treat a minimum of 5000 Medicare recipients’ for a minimum of three years.  Very few, if any, doctor’s offices have 5000 Medicare recipients as patients. The PPACA is trying to force doctors into groups or into employer-employee relationships.  Only large groups can qualify for any of the reimbursement of savings that the ACO legislation offers.  The private practice doctor either needs to join a group practice or be left out in the cold as far as ACO’s are concerned.  In addition to the fact that 50% of openings for doctors are in hospitals, hospitals are growing by merging with or acquiring private practice physicians.

 Despite all the rhetoric about trying to improve the quality of patient care, most hospitals and group practices still compensate doctors for the number of services provided, not the improved health of their patients.  While I agree with the objective of rewarding healthcare providers for improving the health of their patients, the insurance industry and Medicare still reimburse doctors and hospitals for procedures performed, in the traditional ‘fee-for-service’ format.  Changing this format is extremely difficult.

The problem is: “How do you measure improved health within a patient population?” Without a parallel universe, it is almost impossible to measure outcome based healthcare, or wellness care.  If you just reward doctors for reducing the cost of healthcare, then all a doctor has to do is decrease the amount of services provided.  That is how the HMO’s were able to reduce healthcare costs, but their patients were not satisfied with the level of care they were receiving, so the patients left the HMO’s.

 Through government mandates and cost containment goals, healthcare is being forced into being just another commodity.  Quality doesn’t matter and one doctor or hospital is the same as another.  Private practice doctors need to fight this trend and strive to offer their patients quality, personalized healthcare.  I have to believe that the quality healthcare that a private practice physician can provide will allow the private practice doctor to survive in today’s healthcare climate.  There will be a shake-out over the next few years, but if you stay focused on the well-being of your patients, you will be able to continue to be a successful practitioner.

 

 

 

 

 

 

Last modified on Tuesday, 14 June 2011

DG Comfort

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2 comments

  • Comment Link John Johnson Tuesday, 05 July 2011 posted by John Johnson

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  • Comment Link Satinder Ajrawat MD Thursday, 16 June 2011 posted by Satinder Ajrawat MD

    Some brave soul (or souls) will have to take the plunge and cut off their ties to all insurances and only see patients in their office who will pay them on the day of service. The patient could then collect re-imbursement from the insurance company. As long as the patient doesn't have to hassle, nothing will change. The patient will need to be involved in all these payment models.
    Lot of innovations will evolve as this healthcare reform shakes out.

 

 

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