FP Report -- 1999 Post-Assembly Edition
Physician compensation can improve quality of care and bottom line
Compensation plans for group-practice physicians have a lot to do with how physicians provide care, their productivity and where they tend to focus their efforts. In an Assembly session on physician compensation Sept. 16 in Orlando, Fla., two expert speakers shared their insights into compensation plans that improve both quality of care and the bottom line.
"Compensation in primary care has increased at the rate of about 9 percent over the past five years," said Steven Berkowitz, M.D., president of the consulting firm SMB and Co. in Austin, Texas. "In the same period, productivity has gone up by 8 percent. So primary care physicians have had to work harder to increase their compensation."
He said that, in general, physicians need to increase their efficiency and productivity by at least 10 percent per year to keep pace with inflation. A key way to increase physician productivity is with a fair and equitable compensation plan.
Berkowitz discussed two models for compensating physicians -- a market model, in which physicians are paid relative to free-market compensation for their particular specialty and demographics, and a net economic contribution model, in which physicians are paid relative to their contributions to the group practice. The contribution model, he said, provides greater incentives to increase productivity.
Leonard Fromer, M.D., associate clinical professor of family medicine at the University of California at Los Angeles and a member of the Prairie Medical Group in Santa Monica, described a sample compensation plan based on his own experience at Prairie Medical.
The first step, he said, in developing a group-practice compensation plan is to establish a long-term plan to achieve desired outcomes, including improving patient satisfaction, encouraging comprehensive care, improving continuity of care, improving quality of care and increasing revenues.
"In the transition from fee-for-service to partly or fully capitated systems, physicians need to change their thinking from focusing on what's good for the individual to focusing on what's good for the group," Fromer said. "If the group prospers, so do you."
In any compensation plan, peer review is a key regulator of the quality of care the group produces, he said. In his group, the plan rewards quality of care, links performance to compensation and bases 30 percent of pay on peer-review scores.
Another key factor is patient satisfaction. Fromer recommended that each group do patient surveys to assess satisfaction. He advised the physicians at the seminar to use Vital Signs, which is patient survey software available from AAFP.
FP Report is published by the AAFP News Department. Copyright © 1999 by American Academy of Family Physicians.
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