Competition for physicians is already heated. It’s about to get scorching. Demand is on a trajectory to drastically outpace supply, with a projected shortage of up to 120,000 physicians by 2030, according to the Association of American Medical Colleges.
This trend might seem disheartening, but we see it as an opportunity. To be successful in value-based healthcare, you need to attract and keep the most talented physicians.
A physician compensation model that clearly rewards individuals for their contributions toward organizational goals can help attract top talent and keep them engaged. As payers increasingly shift to value-based payment models, now is an ideal time for healthcare organizations to transform their physician compensation models to align with the organization’s value-based initiatives.
Effective Compensation Design Takes Balance
The promise of value-based care is its ability to improve the health of populations and reduce costly “rescue” care, making the business of healthcare more economically sustainable. Top-performing healthcare organizations are bearing this assumption out. The 100 Top Hospitals consistently achieve better risk-adjusted outcomes, lower average cost per beneficiary and higher profit margins than their peers.
How can other hospitals, health systems and physician practices achieve these outcomes? Given that most physicians currently operate in both fee-for-service and value-based worlds, the right compensation model must meet the needs of today’s revenue streams while creating incentives for physicians to support value-based initiatives.
Finding this balance can be challenging, but the rewards are immense. Consider the power of sharing data with physicians that clearly shows a direct tie between their individual actions and organizational outcomes, including overall costs and profitability. The physician who sees those connections is more likely to be a vocal champion for initiatives designed to improve the value of care and less likely to experience burnout.
The Imperative of Physician Engagement
Changes in compensation systems can be disconcerting, and the stakes are high to get it right. Physician engagement is essential to quality, safety, patient satisfaction and financial performance. Just like in any cultural transition, communication and transparency in the process are critical to gaining buy-in and support from physicians when changing the compensation system.
In the beginning, make sure everyone is on the same page about the organization’s vision, mission and strategic objectives. Explain how these objectives have changed as a result of payment model reform. When physicians understand the need for change, they will be better prepared to accept personal responsibility and act as role models and champions for the necessary behavioral changes and infrastructure investments.
Seek physician input early and often throughout the transformation process to ensure the plan meets the needs of the organization as a whole. Involve representatives from primary care and specialty practices to ensure the model adapts to different needs and practice patterns.
Success in value-based models cannot be achieved without the support of physicians. By aligning your compensation model with value-based goals, you will fully engage your current physicians and attract top clinicians who can help your organization move to the next level.
In our next post, we will dig into some of the strategies of effective physician compensation model design.
If you’re ready to delve even more deeply into physician compensation models, download our white paper to learn how to use compensation models to help your organization attract and retain top talent in preparing for a value-based future.
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