Geisinger P4P improves patient volume, physician retention

Under a pay-for-performance model, Geisinger Health System's physicians saw more patients and earned higher compensation, executives at the nonprofit Pennsylvania system wrote in the September Health Affairs.

Although hospital leaders acknowledged that it's difficult to distinguish whether improved efficiency comes from the compensation model or from other interventions, Geisinger said early results from the experimental pay model is encouraging, according to Geisinger President and CEO Glenn Steele, Executive Vice President and Chief Medical Officer Albert Bothe and Thomas Lee, board member of Geisinger Health System Foundation and Geisinger Health Plan and an internist and cardiologist.

Geisinger ties 20 percent of total physician compensation to incentives, based on the organization's strategic goals.

"As do all people, physicians respond to incentives, so the design of physician compensation systems can strongly influence the performance of their organizations," the authors wrote.

The health system defines the incentives annually for each type of clinician.

About 80 percent is base salary for work relative value units related to teaching, research and administrative activities, paid in monthly checks.

Specialist physicians receive incentive payments based on quality (40 percent), innovation (10 percent), legacy (10 percent), growth (15 percent) and financial metrics (25 percent).

Primary care physicians receive 78.5 percent in base salary, about 8 percent for active participation in Geisinger's medical home model, while the other 13.5 percent is divided among quality (60 percent), citizenship (6 percent) and financial performance (34 percent).

The health system doles out incentive payments twice per year--a March payment for the July to December performance and a September payment for the January to June period.

According to execs, the compensation model--although acknowledging the industry still operates on fee for service--has seen results.

Physician's production for work units rose 39 percentage points from 2002 to 2010, and compensation jumped from an average of 9.5 percentage points below a Geisinger survey median to 3.6 percentage points above it.

Geisinger also noted physicians seem to be content with the arrangement and will stick around longer. Current physician turnover is at 4 percent to 5 percent at Geisinger, compared to 6 percent at other hospitals, according to the article.

However, skeptics of the pay-for-performance model still warn that physicians can game the system by misleading reporting. It's important to remember to keep measures relevant yet attainable.

For more information:
- check out the study abstract

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