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Aligning Physician Compensation in a Value-based World: Page 2 of 2

Aligning Physician Compensation in a Value-based World: Page 2 of 2

Lastly, I'd say shadow anything before you put it into place. Run it side-by-side with other [compensation] models for a while so you know what the change will be before you start affecting physician pay.

Morris: I usually say, "Keep the bottom line in mind." Especially in a private practice setting, you don't have as much room for error in implementing some of these new compensation models or theories, so shadowing is important. Keeping a baseline production expectation of some kind is important during a transition—[patient] panel, RVU productivity, or some other threshold you can accurately measure.

PP: What does it take to make these changes a reality? Who needs to be on-board?

Chamblee: Process-wise, I always recommend looking at structure first, then economics. What I mean, especially in private practice, is that dealing with physician compensation is typically a "zero sum game." If you have 10 physicians and you change the compensation arrangement, typically it is going to take some money from one and move it to another doctor, because you don't all of a sudden have a new form of revenue to support the compensation structure.

As a group, sit down and ask strategically: What is the best practice in terms of addressing a structural compensation model? What components do we need in place? What aligns it with reimbursement environment? Outline a structural model before modeling it out on a per physician basis. If everyone can buy in to [the] structure, it makes the digesting of [the] economic impact a little easier. You can point to the "why" and so structure first, economics second is one of the key ways we see making changes to comp structures a reality.

Alongside that is having key stakeholders involved. If you are dealing with a 200-physician practice, you won't be able to have every physician at the table in terms of making compensation decisions. You will need to have a representative body that comprises a compensation committee. If you have a five to 10-member group, everyone can be at table, working collaboratively to develop a revised structure that will work in the future.

Morris: When we are sitting down in rooms [with physicians], the number one thing that comes across the table from the other side is: What's going to happen to my pay? What are these new quality measures and what will they affect? What does "performance" mean?

When we focus on structure and get buy in for each component of a model, it puts some of those fears about performance incentives to rest.  The shadowing process allows providers to see individual reports of what is going to happen to [their] compensation and how this is going to play out. In that process, they get to choose what kind of things make sense to measure. Things that will actually not only improve the quality of care, but align physician behaviors with how the practice is getting reimbursed.

So spending a lot of time and energy in that process, discussing compensation philosophy and structure with key players and the compensation committee is very helpful in overcoming the initial resistance and explaining how all of it is going to work.

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