News: Physician compensation focuses on volume rather than value, study shows

Despite a push to shift from fee-for-service to value-based payments in healthcare, a study published in the Journal of the American Medical Association (JAMA) Health Forum found that physician compensation remains overwhelmingly based on volume of services, HealthLeaders reported.

The study notes three key data points:

• Volume-based compensation was the most common type of base pay for more than 80% of primary care physicians and for more than 90% of physician specialists.
• Although quality and cost performance financial incentives were used by health systems in the study, the percentage of total physician compensation based on quality and cost was only 9% for primary care physicians and 5% for specialists.
• Increasing the volume of serviced provided was the most commonly reported method for physicians to increase their compensation, with 70% of physician organizations having such an arrangement. Among these organizations, volume-based incentives accounted for more than 66% of compensation.

“Performance-based financial incentives for value-oriented goals, such as clinical quality, cost, patient experience, and access, were commonly included in compensation but represented a small fraction of total compensation for [primary care physicians] and specialists in health systems, operating at the margins to affect physician behavior,” the study says. “Taken together, these findings suggest that despite growth in [alternative payment models] and [value-based payment] arrangements, these value-based incentives were not commonly translated into health system physician compensation, which was dominated by volume-oriented incentives.”

The study found physician compensation being geared towards volume of services was intended to drive health system revenues, HealthLeaders reported.

“Despite growth in value-based programs and the need to improve value in healthcare, physician compensation arrangements in health systems do not currently emphasize value,” lead study author said. “The payment systems that are most-often in place are designed to maximize health system revenue by incentivizing providers within the system to deliver more services.”

Editor’s note: This article was originally published by HealthLeaders. The JAMA published study can be found here.