By now, you've probably heard that healthcare compensation is moving toward a "value over volume" ideal. However, the transition seems to be progressing at a tortoise-like pace, according to new survey data.
Released just days ago, the annual 2014 Physician Compensation and Productivity Survey from compensation and HR consultancy Sullivan, Cotter and Associates reveals physician incentive compensation for quality is becoming more prevalent. According to the survey, which polled 517 organizations covering over 98,000 healthcare providers and 240 specialties and positions, 39% of participants reporting the use of quality metrics, an increase from the 32% reported in 2013. The overall actual quality incentives make up approximately 5% of physician compensation, which is consistent with 2013 findings.
"Certainly we've seen a significant uptick in physicians using quality metrics, or pay for performance," says Kim Mobley, managing principal and national practice leader of physician compensation for Sullivan, Cotter and Associates. "It’s a slow and steady increase."
How best to incorporate pay-for-value
More specifically, says Mobley, healthcare organizations are looking for ways to incorporate quality metrics into compensation models.
"Organizations must understand the effect quality incentives have on the compensation and behavior of the physician as well as the organization's finances," she says. "The physician compensation plan and philosophy should align with organizational objectives to ensure the physicians are prepared for change. Choosing measurable quality metrics is key to physician buy-in."
But even though value is moving to the heart of compensation, healthcare organizations need to find a way to handle increased volume, as more patients seek primary-care services thanks at least in part to the Affordable Care Act.
The survey also shows a continued increase in the employment of physicians and expansion in the use of advanced practice clinicians (APCs).
In 2014, 68% of participants indicated that they increased their employed physician and APC population, while 66% of participants plan on increasing the number of employed physicians and APCs within the next year.
"When you have increased access to a larger patient population and a focus on efficiency, that has really driven the APC strategies," says Mobley. "There's a huge increase in practices trying to recruit and retrain advance practitioners."
Physician compensation stagnated
In addition to shedding light on the movement toward value-based compensation, the survey reveals more evidence that physician compensation isn't moving much.
Participants in the Sullivan, Cotter and Associates survey reported a median total cash compensation (TCC) increase of 4.9% for primary care and 1.9% for medical specialties, down slightly from the 5.7% increase for primary care and 3.2% increase for medical specialties reported in 2013. Surgical specialties experienced a slight increase of 2.5% in 2014 compared to 2.3% in 2013.
Months earlier, 42% of the 1,338 physicians who responded to Physicians Practice's 2014 Physician Compensation Survey said their personal income has not changed over last year. The 2013 Medical Group Management Association's 2013 Physician Compensation and Production Survey Report also showed physician pay increases have barely budged, rising about 3% for primary care doctors, like family doctors, internists and pediatricians, to $220,942 in 2012 compared with $212,840.
"Our data also show that work RVU productivity is relatively flat or declining," says Mobley. "Collections have also declined to some degree. Reimbursement is not going up, per se, but the rates paid per work RVU have increased."