A back-to-basics physician compensation strategy ​​​​​​​could improve job satisfaction and patient care

Doctor putting money in pocket
Paying doctors a salary could improve their job satisfaction. (Getty/Niyazz)

Paying doctors a set salary instead of compensating them based on volume could improve physician satisfaction and patient care, says a pair of experts.

Fee-for-service payment schemes encourage doctors to order more, and different, tests and procedures for patients in order to get paid, according to a Viewpoint article from two economists that was published in the Journal of the American Medical Association as part of a sweeping look at ethical quandaries for doctors.

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The consequences of this compensation strategy “dwarf” those of payments from pharmaceutical and medical device companies, an ethical concern that has spent much more time under the microscope, George Loewenstein, Ph.D, an economics professor at Carnegie Mellon University and one of the article’s authors, said in an announcement.

"Paying doctors to do more leads to overprovision of tests and procedures, which cause harms that go beyond the monetary and time costs of getting them,” Loewenstein said. “Many if not most tests and procedures cause pain and discomfort, especially when they go wrong."

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Since unnecessary or ineffective patient tests can drive up costs, a better strategy is to switch to a straight salary system, Loewenstein and co-author Ian Larkin, Ph.D., an assistant professor of strategy at UCLA’s Anderson School of Management, argued.

Major providers such as Mayo Clinic, Cleveland Clinic and Kaiser Permanente have found success in this approach. A common strategy is to have doctors disclose any financial interest in a given procedure, but disclosing conflicts of interest has had minimal, and sometimes negative, impacts on patient care, they added.

Paying docs a salary could also improve job satisfaction, as it takes away the headache of dealing with complex fee-for-service systems.

Under a fee-for-service payment model, physicians are forced to “consider the ramifications of their decisions for their own paychecks,” Larkin said.

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