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In 2002, Geisinger Health System, based in Danville, Pa., became one of the first health systems to tie the compensation of its employed physicians to their performance on quality and efficiency measures. Thirteen years later, it reversed course, scrapping
compensation incentives based on performance measures and productivity.
“At the end of the day, there's never any perfect system to incent exactly the right things,” says Jaewon Ryu, MD, JD, Geisinger’s executive vice president and CMO. “You’re either missing something that should be in the measurement pool or maybe some things in there
aren’t exactly the right things.”
Since January 2016, Geisinger’s nearly 1,600 employed physicians have been paid a straight salary and expected to adhere to a “social compact” that delineates the health system’s goals. The new strategy seeks to make it easy for physicians to support the health system’s
population health focus without worrying about how it affects their pay.
“We felt that this approach would work better for us to make sure we were always doing the right thing for our patients, such as coordinating care and addressing care needs proactively,” Ryu (pictured at right) says.
The idea of aligning physician compensation strategy with a health system’s quality and efficiency goals has been popular for years, but actual implementation of pay-for-performance (P4P) compensation plans was fairly rare until recently, says Travis Singleton, senior vice
president for Merritt Hawkins, the nation’s largest physician search firm.
Although many health systems aspired to physician P4P, most lacked the critical mass of physician employment to proceed. Employment reached a tipping point about three years ago, and now the majority of physicians are employed instead of independent.
Merritt Hawkins’s 2017 Review of Physician and Advanced Practitioner Recruiting
Incentives reported on the 3,287 permanent physician and advanced practitioner search assignments that the company conducted during the year ending March 31, 2017:
The trend of incentivizing quality-based performance may gather strength, Singleton says, but he also thinks it may ultimately fade.
“There certainly is no standard way to do it,” he says. “For those that have had this in place for some time, have they seen better medicine for it? Frankly, I think you could debate that.”
Singleton cites three reasons why tying quality performance to physician pay may not be worthwhile.
In many cases, there is no widespread
consensus on which quality measures to use. “The definition of what quality is and how it’s measured has been a huge issue,” he says.
Physicians resent being financially at risk for quality measures that, while important, might not be pertinent to their specialty or their interaction with a given patient. They worry that their performance will be hurt by the inability or unwillingness of patients to follow treatment guidelines. And they sometimes
get irritated if patient satisfaction scores are considered quality measures.
“We don’t need any more studies to tell us that patient satisfaction doesn’t always equal high-quality outcomes for that patient,” Singleton says. “In fact, more often than not, they don’t correlate.”
incentives are not strong enough to change behavior. In its 2015-16 review, Merritt Hawkins found that quality performance influenced only 4 to 8 percent of total compensation, Singleton says.
“And most economists would argue that, with anything less than 10 percent, you are probably not altering daily behavior through compensation,” he says.
Of course, many health systems are improving patient outcomes and performance on the quality measures they consider important. But Singleton suspects that cultural or management changes are the real cause.
“Is the quality incentive something physicians are going to think about on a quarterly basis when they turn in their reports? Sure,” he says. “Is it something they’re going to think about on an annual basis when they’re reviewing their total production bonus? Sure. Is
it something they’re going to think about before they talk to a patient during that 15-minute visit? Probably not.”
and implementing a quality measurement program that physicians embrace is
challenging. As employed physician groups continue to expand, getting everyone to agree on how a program should work becomes more difficult. And a lack of physician buy-in will sabotage even the best-laid plan. “It you don’t have it, anything you try to implement—a
compensation plan included—is going to be very difficult,” Singleton says.
He encourages employers to develop simple compensation plans that can be described to job candidates in about two minutes, including details about any incentives. Hires should be physicians who are committed to the organization’s goals, and leadership should create a
culture and management infrastructure that supports their pursuit of those goals.
“Why are we messing around with all these death-by-a-thousand-pinpricks changes to compensation, which we can’t really say is giving us better quality anyway?” Singleton says.
For 13 years, Geisinger’s physician compensation program linked 40 percent of incentive compensation—which equated to approximately 8 percent of total cash compensation—to quality measures.
In its new program, Geisinger’s relationship with its employed physicians is based on a social compact that includes five core tenets:
No financial incentives are tied to performance, but the compact is envisioned to guide discussions around performance reviews, Ryu says. For example, the patient care tenet may include a review of physician-level data on prevention screenings, HEDIS measures, patient
satisfaction scores, or other appropriate metrics.
The citizenship tenet, meanwhile, can be evaluated by whether a physician takes call duty, responds promptly to requests for help or information, and completes and shares patient notes with other clinicians in a timely manner. “If you're a hospitalist, are you helping us get
patients out earlier in the day so that it improves our hospital flow? If you're a specialist, are you responding to ‘curbside’ consults from primary care physicians seeking guidance on how to manage a particular case? We still want our physicians to be productive with their time, but RVU is just one
reflection of that,” Ryu says.
The goal of the compensation strategy is to create an environment that lets physicians make good decisions about patient care and use of resources—that gives physicians freedom, for example, to spend time addressing multiple issues presented by a complex patient instead of worrying
about keeping the visit short to hit an RVU target.
“Our expectation is that you take care of the patient so that they don't need to turn right around and go to the ER or have to come back for a repeat visit because issues did not get addressed, which creates a terrible patient experience—and, by the way, increases the
total cost of care,” Ryu says.
In conjunction with the new social compact, Geisinger increased compensation levels, generally paying physicians at the 50th percentile nationally or above. Together, the emphasis on a social compact and the higher compensation level have helped Geisinger recruit approximately
250 new physicians and 130 advanced practitioners since the new plan was implemented.
Ryu expects the increase in Geisinger’s budget for physician compensation to be offset by the impact of physician decisions that support the organization’s big-picture goals.
“This is built on our priority of population health—taking better care of people and driving down the total cost of care,” Ryu says. “Sometimes we need physicians to do things that may not be ‘RVU-rich’ but generate tremendous value for the organization and the patients we serve.”
Ryu suggests three tactics to consider when developing and implementing a new physician compensation plan.
He is not ready to suggest that straight salary is the right approach for all organizations to use.
“We are still new to this, so we are learning,” he says. “By no means do we think this is perfect, but there has been a nice engagement around some of the things we're trying to drive, including quality, patient experience, and population health. We do like this
model better than what we had before.”
Lola Butcher writes about healthcare business and policy topics for several HFMA publications.
Quoted in this article:
Jaewon Ryu, MD, JD, executive vice president and chief medical officer, Geisinger Health System, Danville, Pa.; Travis Singleton, senior vice president, Merritt Hawkins, Dallas.
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Patient financial engagement is more challenging than ever – and more critical. With patient responsibility as a percentage of revenue on the rise, providers have seen their billing-related costs and accounts receivable levels increase. If increasing collection yield and reducing costs are a priority for your organization, the metrics outlined in this presentation will provide the framework you need to understand what’s working and what’s not, in order to guide your overall patient financial engagement initiatives and optimize results.
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This white paper, written by Apex Vice President of Solutions and Services, Carrie Romandine, discusses the importance of patient segmentation and messaging specifically related to the patient revenue cycle. Applying strategic messaging that is tailored to each patient type will not only better educate consumers on payment options specific to their billing needs, but it will maximize the amount collected before sending to collections. Further, targeted messaging should be applied across all points of patient interaction (i.e. point of service, customer service, patient statements) and analyzed regularly for maximized results.
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This white paper, written by Apex President Patrick Maurer, discusses methods to increase patient adoption of online payments. Providers are now seeking ways to incrementally collect more payments due from patients as well as speeding up the rate of collections. This white paper shows why patient-centric approaches to online payment portals are important complements to traditional provider-centric approaches.
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Large Health System Drives 10% UP (Patient Payments) and 10% DOWN (Billing-related Costs)
Faced with a rising tide of bad debt, a large Southeastern healthcare system was seeing a sharp decline in net patient revenues. The need to improve collections was dire. By integrating critical tools and processes, the health system was able to increase online payments and improve its financial position. Taking a holistic approach increased overall collection yield by 10% while costs came down because the number of statements sent to patients fell by 10%, which equated to a $1.3M annualized improvement in patient cash over a six-month period. This case study explains how.
ICD-10: Managing Performance
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Clarity Drives Collections
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Read how Orlando Health was able to perform deeper dives into claims data to help the health system see claim rejections more quickly–even on the front end–and reduce A/R days.
Revenue Cycle Payment Clarity
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Wallace Thomson Hospital Automates to Maximize Limited Resources
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7 Steps for Building and Funding Sustainability Projects
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Key Capital Considerations for Mergers and Acquisitions
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Trend Watch: Providers adapt as value-based care moves from hype to reality
Announcements from several commercial payers and the Centers for Medicare and Medicaid Services (CMS) early in 2015 around increased efforts to form value-based contracts with providers seemed to point to an impending rise in risk-based contracting. Rather than wait for disruption from the outside in, health care providers are now making inroads on collaborating with payers on various risk-based contracting models to increase the value of health care from within.
Yuma Regional Medical Center case study
Yuma Regional Medical Center (YRMC) is a not-for-profit hospital serving a population of roughly 200,000 in Yuma and the surrounding communities.
Before becoming a ZirMed client, Yuma was attempting to manually monitor hundreds of thousands of charges which led to significant charge capture leakage. Learn how Yuma & ZirMed worked together to address underlying collections issues at the front end, thus increasing Yuma’s overall bottom line.
Reforming with a New 50-Bed Acute Care Facility
Kindred Hospital Rehabilitation Services works with partners to audit the market and the facility’s role in that market to identify opportunities for improvement. This approach leads to successes; Kindred’s clinical rehab and management expertise complements our partners’ strengths. Every facility and challenge is unique, and requires a full objective analysis.
5-Minute Briefing on Revenue Integrity Through HIM WhitePaper Hospitals FS
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Providers Focus Too Much On Revenue Cycle Management
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Lucille Packard Children’s Hospital Stanford Case Study
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ZOLL and Emergency Mobile Health Care Case Study
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Maximizing Medicare Reimbursements White Paper
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Denials Deconstructed: Getting Your Claims Paid
Getting paid what your physician deserves—that’s the goal of every biller. Yet even for the best billers, achieving that success can be elusive when denials stand in the way of success, presenting challenges at every turn. Denials aren’t going away, but you can learn techniques to manage and even prevent them.Join practice management expert Elizabeth W. Woodcock, MBA, FACMPE, CPC, to: Discover methods to translate denial data into business intelligence to improve your bottom line, determine staff productivity benchmarks for billers, and recognize common mistakes in denial management.
Automation and Operational Improvement Drive Sustainable Results
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Revenue Cycle Management Resolves Migration Implementation Issues
Many healthcare organizations are pursuing next-generation health information systems solutions. Learn more about Navigant's work with University of Michigan Health System.
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Building A Common Vision with Employed Physicians
HSG helped the physicians and executives of St. Claire Regional in Morehead, Kentucky, define their shared vision for how the group would evolve over the next decade. As well as, develop the strategic and operational priorities which refocused and accelerated the group’s evolution.
Practice Performance Improvement
The client was a nine-hospital health system with 14 clinics serving communities in a multi-state market with very limited access to care, poor economic conditions, high unemployment, and a heavy Medicare/Medicaid/uninsured payer mix. In most of these communities, the system was the sole source of care.
Though the clinics were of substantial size (they employed 98 physicians) and comprised of multiple specialists, the physicians functioned as individuals and the practices lacked any real group culture.
Clinical Integration Without Spending a Fortune
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Effective Revenue Cycle Management in Your Network
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The efficiency of a medical practice’s billing operations has critical impact on the financial performance. In many cases, patient billings are the primary revenue source that pays staff salaries, provider compensation and overhead operating cost. Inefficiencies or inaccurate billing will contribute to operating losses.
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