Hospitals must rethink physician compensation

New recommendations from the Healthcare Financial Management Association (HFMA) suggest using stringent guidelines when setting physician compensation.

The issue of what to pay doctors has become increasingly vexing for hospitals and healthcare systems as they retain more staff physicians as a result of accountable care organizations and other structures related to the implementation of the Affordable Care Act.

According to the HFMA report, fair market value should not be set based on what competing hospitals are paying their physicians, nor should it be based on the potential referring volume of the physicians.

"From a compliance perspective, hospital leaders should be able to answer 'yes' to two questions: Could I defend and explain the derivation of the compensation paid to the physician for the services provided in a court of law? And, more specifically, has the compensation been established without considering the value or volume of referrals?" the report states.

Meanwhile, a report from the Huron Consulting Group recommended overhauling the metrics used for determining physician compensation, shifting away from volume only.

"Complete a fresh evaluation of physician compensation, trading some productivity incentives for a more balanced approach that rewards good physician 'citizenship'--including quality and engagement performance metrics--as well as productivity," the Huron report states. "This will help lay the groundwork for the volume to value shift."

For more:
- read the HFMA report
- here's the Huron report (.pdf)

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