The idea that we have to “change incentives” for physicians is all the rage. Oceans of ink are being spilled over the transition away from the traditional fee for service payment model to a menagerie of value-based ones. At the core of much of the discussion about how to make the transition is figuring out how risk-bearing organizations like large physician groups, health systems, ACOs and the like are going to provide appropriate incentives to the individual, front-line physicians who are providing the clinical care. It is not a trivial problem to solve.
The usual explanation of the challenge goes something like this: In the old days, when organizational success was defined by the number of “heads in beds” in hospitals or patient encounters in the clinic, it was pretty straightforward to share that success with physicians.
The more patients they saw (or procedures they did), the better it was for everyone, and rewarding productivity floated everybody’s boats. Under alternative payment models, the measures of success of the organization are different and more complex — generally combinations of quality measures, patient satisfaction, efficiency, etc. — and translating that into new physician payment models is not so easy. If you continue to reward productivity, then it may defeat organization efforts at efficiency; make the payment model too complex by including many different performance metrics, and physicians don’t get invested in any of them; make the model too simple, and physicians will be insulated from the organizational goals.
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