Physician Incentives- How to structure them the right way?

Physician Incentive Plans- How to structure them the right way to ensure productivity and quality

I work for a large multidisciplinary medical group that provides clinical care for a significant portion of our community. Our medical group is a part of a large independent academic health center and we are closely aligned with the system’s goals of population health and partnerships with payors and ACOs.  Specifically, our providers and practices partner with an Accountable Care organization that have upside risk contracts for Medicare patients and have been heavily involved in discussion on how to reduce patient costs.

Our health system has also heavily invested in the concepts of Provider happiness and have recently created an Office of Provider Wellbeing that focuses on reducing burnout and assuring joy in work. The primary drivers of provide dissatisfaction are EMR usage, and lack of protected time for professional development, academic work and teaching.

Finally, we are feeling pressure from our Corporate Finance partners to increase the clinical efficiency of our practices by increasing volume and decreasing staff expense. The Finance team have been very collaborative partners with operational and clinical leaders in doing this work and ensuring the continued high quality nature of our practices but we are nonetheless challenged to make improvements.

The challenge we are facing is how to structure our provider incentive plans to help us meet all our key aims. Traditionally, many health systems or physician practices have created wRVU based incentives plans that primarily structured to pay incentives based on productivity above a specified wRVU target. The upside of these plans is that physicians are highly motivated to stay productive. The downside is that the incentive structure invites over treating patients or pursuing aggressive treatments for patients as it provides financial rewards for the providers.  However, by excluding any wRVU element in an incentive plan, we are creating an environment where potentially providers don’t have monetary incentives to increase access or efficiency.

What is the best way to blend these competing interests? How to best structure our incentive plans to balance these elements?


Public/Private Competition


Patient flow from ER to the wards does not flow

Participant comments on Physician Incentives- How to structure them the right way?

  1. Are you utilizing a CARTS model. This, in theory, compensated providers for all the responsibilities. Those who chose to be more productive clinically, will do so by generating more RVUs.

  2. a very recognizable problem!
    the blend could be the introduction of a (new) system in wich, all of the quality and performance indicators are defined like: comparison of quality of individual doctors, efficiency, production, contacts and training of GP’s and other primary care workers, patient-satisfaction, usage of budget etc. A calculation model has to be determined together and with approval of the doctors. A bonus or malus is incorporated in this system. Starting with just a portion of the total of reimbursement and gradually making it a bigger part.

  3. Yes it is a big problem that all organizations across the country have to deal with. In the future wRVUs cannot be the drivers for incentives. A blended approach has to be taken with relative percentages of incentives for wRVUs, teaching time spent, academic productivity (papers written/grants obtained) and finally for service to the institution (time allocated for committee work for example). Lastly if a physician speaks at a national or international conference, those could be rewarded with a recognition. If compensation and incentives is solely based on RVUs, then I would have no interest teaching or doing any of the other activities. You can get physician buy-in if you use a blended approach.

  4. We’ve been on the pay for performance journey for many years now, both pay for the providers and by the insurance companies. Even on the straight wRVU model, we instituted a “withhold” that protected the provider and organization from under-performance. We also have value-based metrics as a % of the total comp that can be earned or lost based on individual and departmental metrics. The % of these VBM vary and are becoming greater as we move more toward value contracts. Our Primary Care service has their own comp model with weighted emphasis on production, panel size and quality outcomes (as usually rewarded by the payors). The better we can track, measure and reward individuals for their outcomes across all these measures the more palatable the changes have become for the MDs.

    It’s important for the organization to realize that population management done right doesn’t usually equate to lower expenses, but investing in the right resources and processes can yield significant ROI if designed and aligned properly. I believe the components of comp plans will always be evolving it to meet the new demands of the environment and letting the MDs know that is part of it from the beginning can minimize distrust and frustration.

  5. Seems like all/most responses suggest a blended or multi dimension model, which is what I would recommend. Threshold for wRVUs is important, but quality and patient satisfaction components also important.
    Most of the responses don’t really address the physician satisfaction piece or how preventing burnout links to physician incentive model. Some wellness programs give incentives for participation (like increase CME support, etc).

  6. We also use wRVUs as a part of compensation but we were also concerned that this would lead to over billing. What we found was that having ~15% of the compensation be tied to wRVUs was enough to motivate people to be productive and chart appropriately but not enough to game the system. The other thing that we did was provide data to the clinicians that showed where they stood in the group in many quality areas. This helped to keep everyone focused on quality and allowed for conversation about why someone might be very successful with a specific diagnosis vs someone else.

  7. Our physicians are paid 90% on volume of wRVUs and 10% on quality/performance measures; I don’t think 10% is enough. One of the performance measures for our outpatient clinics is controllable cost (staff, supplies, Rx, facility) per Total RVU. This is a cost per unit of service measure that we set goals for. We aren’t prescriptive in communication regarding more volume or less cost, however, we do expect departments to manage their cost per TRVU.

  8. Difficult issue.
    We have used physician compensation committees to help set Quality and Service metrics. It has been helpful for these groups to help determine what is measured and where the thresholds are set. Q&S is typically set at 10%.
    Examples of metrics: Chart closure at 48 hours, meeting attendance, teaching, peer chart review, committee membership/attendance, quality improvement projects.
    Typically there are three metrics in a division each worth 3.33%.
    It has been very helpful to have the physicians involved in setting the Q&S metrics.

  9. Having worked in a system where everything was based on a flat salary with expectations for clinical an academic productivity, I saw far too often that people were under productive because there was not a note off of a direct incentive to encourage them to go out of the way to see an extra patient or go the extra mile. Clearly will always have some people who are more committed than others, but it is a matter of trying to motivate everyone. Using RVUs as the only metric does have the potential to encourage waste and unindicated care so I dont think this is the answer, but I think it does need to be blended with metrics that are focused on patient outcomes and the value of care delivered. Many front line physicians have no concept of healthcare economics and hospital reimbursements and only understand the direct impact on their reimbursement. By educating on the hospital finances, buidling alignment and focusing on shared savings this may not only help fund a better physician compensation plan but may hopefully help engage the physicians as stakeholders.

  10. I would strongly consider team, site or division based productivity rewards. I like the idea of a threshold level of productivity to earn your salary, and i also have found that quality and safety must be part of the equation. Rewarding individual providers for productivity encourages over utilization and cherry picking. Learning to function as a team and use resources efficiently is the type of behavior that healthcare organizations should reward.

  11. My organization/Medical Group recently constituted a Contract and Compensation Steering Committee to address this common but complex issue in healthcare industry. We plan to standardize the compensation model that is fair yet allow for productivity and quality and safe patient care. This committee is made up of about 90% physicians from different specialty background. The initial proposal is to have a common/standardized general percentage base pay that correspond to certain percentile on MGMA national average and per specialty and per years of experience. Then some percentage were allocate for wRVU and others for quality metrics. This will hopefully create internal competition while giving the medical group a competitive advantage as it relates to hiring and retention of providers. It is tough and a constantly moving target.

  12. Payors are moving, some faster than others, at incentivizing outcomes over volume. The trick is shifting providers’ incentives from volume to value, at the same rate as the payors. Bonuses from payors for meeting preventive care, chronic illness control and overall improved health metrics for members; help incentivize staff while improving the quadruple aim (lower cost, improved outcomes, patient satisfaction, provider/staff satisfaction).

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