How Are Doctors Paid? Learn the Incentives in Physician Compensation

Summary

In this 'A Healthcare Z' video, Dr. Eric Bricker discusses a recent study revealing that despite value-based reimbursement incentives, physician compensation is still largely volume-based, maximizing health system revenue rather than focusing on quality and cost-effectiveness. The study, published in the Journal of the American Medical Association, analyzed 31 physician practices and found that 84% of primary care physicians and 93% of specialists are paid based on patient volume and procedures performed. Only a small percentage of their compensation is linked to quality and cost effectiveness, highlighting a disconnect between government and insurance initiatives and actual physician incentives.

Takeaways

• 📰 The script discusses a new article from RAND Corporation and Harvard published in the Journal of the American Medical Association on January 28, 2022, focusing on value-based doctor pay.
• 🏥 The research analyzed 31 physician practices owned by 22 different hospital systems and found that 84% of primary care physicians and 93% of specialists were paid based on patient volume and services provided, not on outcomes.
• 💼 The compensation structure is primarily fee-for-service, meaning doctors are paid for the quantity of services rendered rather than the quality or cost-effectiveness of care.
• 🔢 Only 9% of primary care physician compensation and 5.3% of specialist compensation were based on quality and cost-effectiveness, indicating a minimal focus on these aspects.
• 🌐 Half of the doctors in America work for practices owned by hospitals, which is a significant portion of the healthcare system.
• 📉 The article concludes that despite value-based reimbursement incentives, compensation for primary care physicians and specialists is still dominated by volume-based incentives aimed at maximizing health system revenue.
• 🤔 The speaker questions the effectiveness of value-based payment models when the actual compensation for doctors does not align with these models, calling it 'window dressing'.
• 💡 The script highlights the importance of observing actions rather than words, suggesting that despite claims of value-based payment, the actual compensation practices have not changed significantly.
• 👥 A quote from a hospital-owned physician practice leader suggests that the pressure to maximize specialist referrals can limit innovation in payment models.
• 🏆 The speaker advocates for the independence of physicians, implying that independent practices may be more likely to focus on quality and cost-effective care rather than just volume.
• 📈 The script concludes by emphasizing the importance of watching what healthcare systems and practices actually do in terms of physician compensation, rather than just listening to their stated goals.

Q & A

What is the main topic discussed by Dr. Eric Bricker in the video?

The main topic discussed is value-based doctor pay and how it often equates to window dressing, with a focus on a new article that reveals most physician compensation is still volume-based rather than based on quality and cost-effectiveness.

What is the source of the article Dr. Bricker references?

The article is from RAND Corporation and Harvard, published in the Journal of the American Medical Association on January 28th, 2022.

How many physician practices did the researchers examine in their study?

The researchers examined 31 physician practices owned by 22 different hospital systems across multiple states.

What percentage of primary care physicians were found to be paid based on the volume of patients and services they saw?

84% of primary care physicians were found to be paid based on the volume of patients and services they saw.

What does the term 'RVUs' stand for, as mentioned in the script?

RVUs stands for Relative Value Units, a measure used to determine how much physicians are paid for the services they provide.

What percentage of primary care compensation is based on quality and cost-effectiveness according to the RAND study?

According to the RAND study, 9% of primary care compensation is based on quality and cost-effectiveness.

How does the current compensation system for physicians affect the relationship between doctors and their patients?

The current compensation system, which is largely fee-for-service and volume-based, incentivizes physicians to perform more services rather than focusing on quality and cost-effective patient care.

What does Dr. Bricker suggest is the impact of the disconnect between hospital compensation and physician compensation on patient care?

Dr. Bricker suggests that the disconnect leads to a continued focus on volume-based reimbursement for physicians, which can limit innovation and does not align with value-based care principles.

What is the significance of the quote from the leader at a physician practice owned by a hospital?

The quote highlights the internal pressure within hospital-owned practices to maximize specialist referrals, which may override other goals such as innovation and value-based care.

What does Dr. Bricker recommend as an alternative to the current compensation system for physicians?

Dr. Bricker recommends the importance of independence for physicians, suggesting that independent practices may be better positioned to prioritize cost and quality over volume.

What is the role of the new editor-in-chief of JAMA in relation to the discussed topic?

The new editor-in-chief of JAMA has a background in researching financial conflicts of interest in publications and with doctors, which makes the publication of the serious article on physician compensation and fee-for-service more significant.