Published by HFMA
Written by Jen Johnson, CFA and Alexandra Higgins
Quality and efficiency have become paramount in health care as organizations move toward value-based payment models. Because physicians are integral to the provision of care, alignment strategies between health systems and physicians are evolving rapidly. Prior to aligning and ultimately compensating physicians for quality and/or cost savings, a health system must understand myriad factors, including what specific impact is being measured.
Specifically, health system leaders should determine the extent to which each the following serve as the basis for the performance and anticipated quality and/or savings payments:
- Personal performance of a single physician
- Excellence achieved at a service-line level
- Triple Aim success for an entire population through integrated care
Once the goal and alignment strategy are identified, a physician’s impact and contribution can be properly measured. As part of any value-based payment strategy, identifying each party’s responsibility and risk for both quality and financial outcomes is necessary to allow for monitoring progress and rewarding the appropriate party for results.
Alignment Strategies
Many health systems, looking to succeed in a value-based world, enter arrangements with a physician or physicians to improve quality outcomes and/or cost efficiencies. These alignment strategies often are referred to as “pay-for-performance” programs because the physicians are rewarded incentive compensation based on quality and/or cost metrics. In some cases, health systems are internally creating and self-funding these programs in anticipation of future changes to payment. In other cases, health systems are eligible for incentive payments in the form of health plan payment and want to share a portion that compensation with the physicians who helped the organization achieve this eligibility.
The healthcare organization’s desired impact or scale will determine which specific pay-for-performance program it should utilize as an alignment strategy. Programs are variously designed to focus on individual performance, service-line performance, or population or systemwide performance.
