Physician Compensation: Let Form Follow Function

In a world of new access models and price-conscious consumers, the traditional route of patients making appointments to see doctors is being squeezed. These days, consumers are really only interested in schlepping to see a physician when faced with more complex needs. From the physician perspective, this creates a dilemma: While the mix of patients coming in the door is—on average—more complex, the physician compensation model continues to be one that rewards volume and throughput. Complex patients require more time to be properly cared for: more time for their face-to-face interaction with the doctor, more time for clinical documentation, more time for referral management, more time for appropriate follow-up, and so on down the line. When it comes to physician compensation, the dialogue is only beginning to catch up to the new reality.

This isn’t to say the industry hasn’t noticed. In a fact sheet released earlier this summer with the proposed 2018 rule on the Medicare Physician Fee Schedule, CMS stated that it wants “to start a national conversation about … how Medicare can contribute to making the delivery system less bureaucratic and complex.” In essence, they are seeking to re-evaluate prior regulations to simplify and ease clinician burden. This is a step in the right direction toward helping physicians function at top-of-license efficiency.

But what about the more transformative economic shift necessary to reward value over volume?

MACRA and collaboration

The introduction of MACRA establishes new and greater incentives for physicians to embrace performance risk, making models such as MSSP Track 1 more attractive than ever before. This appears to address some of the concern surrounding the greater time investment for more complex patients. However, in true accountable, outcomes-driven models, there is an implicit expectation that physicians, payers, and other caregivers will be working together in new and collaborative ways. This introduces entire new layers of time and effort as new processes must be forged and evaluated, supported by investments in training, technology, and sta. And all of this takes away from the time physicians have available to see patients.

Further consolidation

These issues are making it increasingly challenging for independent physicians and small group practices to keep up. On the administrative side, increased complexity and cost come right from the practice’s pocket. On the clinical side, participation on integrated care teams and performance committees is incredibly time consuming. On the economic side, the uncertainty surrounding value-based payment makes it unfeasible to change the business model in hopes of future shared savings. Not to mention the data collection and analysis necessary to monitor and track performance. Collectively, these factors are driving large numbers of independent physicians and small group practices to join large multispecialty groups, often organized by a health system. Such groups have the resources and infrastructure to support and enable value-based care constructs.

The path forward

This continues to be a tumultuous time in health care. Physician compensation is only just beginning to be pulled into the fray.

With so much focus today on reducing costs, integrating information, and building connectivity to consumers, we mustn’t forget that the point of all of this is to achieve better outcomes for the patient. Fundamentally, physicians need compensation incentives and supporting infrastructure to efficiently deliver the best possible care while bringing their “A” game, including the right focus, attitude, and motivation.

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Zachary Hafner leads the Advisory Board’s strategy consulting practice.

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