In today’s healthcare environment, improving the performance of employed physician practices is essential. As hospitals align with physicians, starting with employed physicians is a good first step since they both serve the same population. Some hospitals consider employment as a method in achieving greater hospital-physician alignment.
But simply employing a physician isn’t enough.
The structure of physician compensation can be a key component for improved physician alignment. Traditional contracts are out. What’s in? Incorporating both productivity and performance components in a balanced manner.
What do I mean by 'balanced?'
Physician compensation should strike a balance between the need to care for as many patients as possible to maximize revenue, with the need to provide the highest quality care and ensure high patient satisfaction.
A balanced approach can’t happen overnight.
The transition from guaranteed salary contracts to this balanced method should occur over a period of months. That way, hospitals can explore appropriate productivity targets, performance measures and targets, and the portion of compensation to be placed at risk.
When a portion of physician compensation is at risk and tied to performance measures, physicians need to focus on achieving performance measure goals to improve overall patient care. Typical performance measures address quality of care, efficiency of care, patient satisfaction and decreasing cost of care.
But the physician needs to maintain a moderate level of productivity while improving performance.
Hospitals can also incorporate a productivity target as a trigger for the at-risk compensation. This way, maintaining reasonable productivity while improving care has no negative effect on net income.
By choosing performance measures and corresponding targets carefully, hospitals and physicians can find themselves in a win-win scenario. The hospital will see better patient outcomes at a lower cost. And the physician will provide better patient care while earning appropriate compensation.
Set yourself up for success!
Physicians won’t buy into performance measures that they have no direct control over. For example, an orthopedic surgeon won’t be willing to be compensated based on overall hospital inpatient length of stay. But it’s likely he/she would have no issue with a surgical measure (like a prophylactic antibiotic start within one hour, or a reduction of orthopedic implant cost per case).
Successful incorporation of performance measures requires hospitals to:
- Choose performance measures relevant to physicians
- Ensure historical data is accurate
- Have a reliable, timely monitoring system
Both the hospital and the physician must understand and agree to the performance measures and the rationale for each target before a performance-based contract can be implemented.
The process to track performance must be accurate and reliable. Historical data will be used to set overall performance targets. But moving forward, there must be a clean process to track measures by physician.
This requires a hospital-wide process to identify physicians appropriately within EHR fields, which will identify the cases to be included for each measure. And the hospital must provide physicians with timely reports on their performance so that continual adjustments can be made to meet the performance targets.
Transparency with physicians throughout the process is instrumental in building trust and aligning priorities. Getting official (and unofficial) physician leaders on board can really help drive changes. Bringing the two parties together often spurs ideas for future enhancement and lays the groundwork for other physician alignment initiatives that will carry a health system forward.
This post first appeared on Action For Better Healthcare.