PHILADELPHIA – Annual performance-based incentive plans are on the rise for physicians, according to a new survey of provider organizations.
The Hay Group’s 2010 Physician Compensation Survey reveals that 92 percent of group-based organizations offer incentive plans to their physicians, up from 75 percent in 2009. Physician incentive plans are also being offered by 63 percent of hospitals this year, up from 51 percent in 2009.
The percentage of integrated health systems offering physician incentive plans remained steady between 2009 and 2010 at 67 percent. Of the 28 organizations that had no physician incentive plans, 39 percent said they were considering them.
“No one should be surprised that healthcare organizations are moving to link pay to performance,” said Ron Seifert, executive compensation practice leader for the Hay Group’s healthcare practice. “Hospitals will increasingly be rated on performance metrics such as patient satisfaction, readmissions and clinical outcomes, and reimbursements are likely to be linked to these as well. Financially, it’s in an organization’s best interest to embrace these changes now, rather than waiting for all the reform dust to settle.”
The Philadelphia-based Hay Group has conducted the survey for more than a decade. The 2010 survey gathered compensation information from integrated health systems, hospitals and group-based physician practices. The survey covered 128 physician specialties, including 40 pediatric specialties, 16 non-physician provider positions and 13 medical directors.
According to Seifert, physician incentive plans are increasingly tied to performance metrics, with ‘patient satisfaction’ and ‘quality’ being the leading factors for all surveyed organizations. Half of the group-based practices responding to the survey tied incentives to patient satisfaction and quality; that percentage was slightly lower for hospital-based (43 percent) and IHS-based (46 percent) organizations.
Incentive plans, commonly called ‘bonuses,’ are typically a supplement to base salary, said C.J. Bolster, national director for the Hay Group’s healthcare practice. According to the survey, base salary increases are remaining virtually flat in hospital-based organizations, with 2.8 percent increases in 2009-2010 and 2.9 percent planned increases for 2010-2011. Group-based physician practices offer higher salary increases (4.8 percent granted in 2009-2010), but the planned base salary increases for 2010-2011 dropped to 3.3 percent.
“There is safety in numbers, and it has never been truer in healthcare than it is now,” Bolster said. “Integrated health systems have scale and they can offer job security in lieu of having to offer higher incentives. Group practices that are not directly tied to a hospital or system will traverse a bumpier road in the post-reform era, but they will continue to attract physicians with an entrepreneurial drive and an acceptance of risk.”
The survey showed that salary structures and salary planning for physicians remain flexible in 2010. Half of the responding hospitals and integrated health systems and 54 percent of group-based physician practices reported that their process is ‘independent,’ meaning that they have a philosophy and structure but that positions, specialties, departments and specific doctors are reviewed individually for their salary potential and subsequent increases.
