Hospitals and Physicians at Odds over Value-Based Compensation Models

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CQM-thumb3Some organizations have found a way to convert from a fee-for-service compensation model to a value-based one, but many hospitals are still struggling, Joe Cantlupe reports over at HealthLeaders Media. Furthermore, when they do have a plan in place, it’s difficult to get their physicians onboard. Why is this?

Steve Marsh, owner and managing partner of national physician recruiting company The Medicus Firm, told Cantlupe  it goes back to volume of care. Hospitals haven’t tossed this element from their compensation models, and as a result, it hinders the organization and its physicians from committing fully to value-based care.

Why? Because if volume helps physicians earn income, then a physician is going to focus on volume.

Marsh explained, “At the end of the day, physicians are going to do more volume to maintain their income levels. No way around it.”

Marsh actually believes physicians will never go for “a system completely based on value.” Most will look for compensation models based on both quality and volume, not to mention those ever-present bonus awards.

He does think  the nation is gradually inching toward a more quality-oriented focus. “Certainly hospitals are being incentivized to do that, when you look at hospital readmission rate data. It’s a great thing.”

But, still, he adds, “I can tell you…looking at a ton of hospital employment contracts, you will see value over volume making up to five percent, 10 percent, or 15 percent of somebody’s income, and the rest is normally based on volume. I think the percentage of income may go up to 20 percent, but I always believe that physicians will be seeing more patients and doing more procedures to increase their income.”

It’s important to remember, Marsh emphasized, that “physicians are getting squeezed from both directions.” How much more can they do to cut overhead and still provide quality care? For that matter, how much more can you as healthcare leaders do?

That’s why when physicians are looking for hospital employment, you may have to employ tougher contract negotiations that are focused on value over volume, as mentioned in our last post.

But be prepared. If The Medicus Firm’s recent survey, as outlined in the article, is any indication, most physicians will probably have some level of dissatisfaction with the resulting agreement.

So, building on the question in our last post, how do you bring physicians onboard a value-based compensation model? How do you, as healthcare leaders, convince them that it’s not just in the hospital’s best interest, but also in their best interest to convert from volume to value?

-by Pete Fernbaugh

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