Compensation and Benefits: Employee Costs Bear Scrutiny, Deliver Results

With contributions from Jen Johnson

Healthcare leaders have to address physician compensation, because physicians understand that the third-party payers are now reimbursing not just fee for service, but also for quality and shared savings,” says Jen Johnson, managing director and chief commercial officer with VMG Health, Dallas. “The physicians are typically the ones who drive the clinical outcome and the shared savings, and they want to participate in the incentives that are coming to the health system.”

The underlying shift of healthcare payments from a fee-for-service model to payment for performance is affecting healthcare compensation at every level. The impact of this shift is evidenced by the ongoing efforts of many health systems and hospitals to determine how best to compensate physicians to account for their contributions to quality.

But that proposition frequently is not as straightforward as it first appears.

“It gets tricky, because most physician payment models that are a year or two old are basically fee-for-service models,” Johnson says. “So you want to move to value-based purchasing, but you’ve got these old models in place. You’re trying to have them work together, which sounds great. But that raises a compliance issue in making sure that you can support your payments to physicians as fair market value.”

And that task, too, has become more complicated than it used to be. Years ago, employers periodically would look at surveys to establish benchmarks to use in determining fair market value of physician services. But with the evolution of payment plans away from strictly a fee-for-service basis, that no longer works.

“Although fee-for-service and value-based purchasing are coexisting in many facilities, most salary surveys do not break out, or even reflect, how much is allocated for quality or shared savings payment,” Johnson says. “So with that data no longer readily available, the guidance for determining fair market value is limited.”

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