HOW VARIABLE COMPENSATION PROGRAMS IN SHARING BOTH THE RISKS AND REWARDS OF HEALTH CARE DELIVERY EFFECTS SPECIALISTS – Class 4

Health plans may use variable incentive compensation methods to compensate specialists, such as sharing in both the risks and rewards of health care delivery, to reward physicians for practicing cost-effectively and for decreasing the variability in patient outcomes

Variable compensation programs for physicians continue to increase in prevalence. HMO’s use incentive compensation most often to motivate physicians toward agreed-on objectives. These variable incentive compensation methods are used by MCO’s to reward physicians for practicing cost-effectively and decreasing the variability in patient outcome. Over the past few years a significant change has been seen in the number of organizations reporting the use of incentive rewards.

There are various reasons incentive pay would be used as part of the specialist’s compensation. For example, this method of compensation aims to reward physicians for practicing cost-efficiently. Also, variable compensation involving the sharing of both the risks and rewards of health care delivery aims to decrease variability in patient outcome.

HMO’s use incentive compensation most often to motivate physicians toward agreed on objectives. There may be a variety of performance goals used, such as organizational profit sharing, partnership agreements, departmental performance distribution, individual productivity measures, and seniority levels.

Sharing both the risks and rewards of health care delivery will be an increasing focus in physician compensation as incentive pay becomes a strategy for: (1) rewarding physicians for practicing cost-effectively; and (2) decreasing the variability in patient outcomes.

Performance Goals Include:

  • Organizational profit sharing
  • Partnership agreements
  • Departmental performance distribution
  • Individual productivity measures
  • Seniority levels

Organizations are using a variety of performance goals such as:

  • Organizational profit sharing
  • Partnership agreements
  • Departmental performance distribution
  • Individual productivity measures
  • Seniority levels

Most organizations continue to rely on individual productivity measures as the basis of incentive pay, although incentives increasingly are based on financial measures of departmental performance.

Most organizations continue to rely on individual productivity measures as basis of incentive pay – incentives increasingly based on financial measures of departmental performance

Top of page