Physician’s Income and Incentives for New Patient Paradigms

With a new era of healthcare reform on the horizon, as well as technological and qualitative promises of improvement in the quality of patient care, new buzzwords are being branded and begin to move our thoughts toward understanding the new paradigm.

Most analysts agree that the fee-for-service system, with its bias toward volume, will eventually fade into the sunset. And although a replacement system hasn't been fully developed, it is becoming more evident that many providers are contemplating how they are going to get their slices of what could be a shrinking pie.

As reimbursement practices changes, accountable care organizations, and/or other delivery systems become the new normal, current trends are beginning to point to unique physician compensation models. Incentive plans are becoming more prevalent, in part because of the recent movement by physicians and groups toward employment and away from private-practice, partnership-track models.

Forward-thinking organizations are beginning to tweak compensation plans now in order to maintain a desirable standard of living while following newly regulated standards of care. Such a program design should include incentives geared toward improving quality, productivity, and patient satisfaction.

While there is never a one-size-fits-all approach to designing a compensation program, a balanced plan should consider and properly weigh the following variables:

• Base income guarantee to guard against low volume cycles. Consideration should be given to seniority. But keep in mind that the additional experience often relates to more complex cases or procedures, which can and perhaps should primarily be addressed by incentive components
• Incentive for productivity - determined by billings, collections, encounters, RVUs or other economic drivers measured against a baseline volume
• Incentive for patient satisfaction – this small but growing component of compensation recognizes the ultimate goal of healthcare reform: quality of care. The organization should develop and collect patient satisfaction surveys. Incentives are paid based upon quantifiable measures of performance and outcomes. To foster teamwork, and in order for a physician to receive the incentive, the entire group must meet a threshold percentile for a given period.
• Other discretionary, quality-based bonuses such as administrative responsibility, community outreach, and peer review.

Whether or not the impetus for change is healthcare reform, it seems clear that a top-notch provider organization will continue to strive toward improvement in the key facets of its service: quality, productivity and patient satisfaction.

Contact Us

For additional information on healthcare industry financial issues, tax management, and physician income incentives, contact Kevin Reynolds, CPA, at 561.367.1040, or click here email Kevin. In a brief consultation, he can address any compliance questions you may have, or advise you regarding tax planning.