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I am a CMO in a medium-size community hospital with one third of our medical staff employed. Our employment model is a remnant of the past; productivity based on a pure net revenue model. It has worked extraordinarily well in the old paradigm.

We are entering into global risk contracts, and we all know these will multiply rapidly. As the article indicates, I think the only logical way to help our physicians align with the hospital is to be sure the incentives are also aligned with our vision of a future state of better coordination, improved chronic care, and accomplishment of the "triple aim"of improved population health, lower per capita cost, and excellent patient experience. To do so, the "system" can enter into these contracts, while creating common incentives across the entire medical staff, hospital, and other providers such as home health. There is no reason that we have to "pass on" the incentives of the contract to individual providers in our system. In fact to do so while contracts change so rapidly is likely to confuse individual providers, and lead to failure to accomplish change because the direction is not clear.

so what are the appropriate incentives? The primary care incentives are pretty clear: advanced medical home models have plenty of examples to choose from, including process and outcome measures for chronic illness care, care coordination, improved outpatient access, diminished emergency room and inpatient utilization, and so forth. A dilemma we are struggling with is how to incentivize our medical and surgical subspecialists. In the old models we distributed shared savings or "pay for performance" dollars to subspecialists based on the volume of visits as a proxy for "work". To sustain this model of distributing financial gain will undo all the benefits being built on the primary care side. The Dartmouth Atlas documents that one of the most important drivers of cost is frequency of visits to specialists. So what are the appropriate incentives for the specialists? Do we need to design specialty specific process and outcome measures for each one?

Are there any models out there to learn from?

 Mark

Mark Novotny, MD, FACP, FHM, FACHE

VPMA/CMO

Cooley Dickinson Hospital, Northampton, MA

413-582-2134

Hi, Mark,

Thank you for your post. We will reach out to the article author and have a response for you early next week.

Megan Downey, Senior Web Editor, ACHE

Hi, Mark,

Here is a response from Dr. Zismer. He has also left you a voicemail to discuss further.

Dear Dr. Novotny.  Your question regarding comp incentives design under financial risk contracts is a good one. Essentially, the question is "what is an effective comp design when the institution assumes financial risk from payers as strategy?" I will respond from two perspectives. The first is experience operating integrated health systems. The second is recent research done on behalf of MedPac which focused, in part , on this issue.  [Report available on MedPac website].

All comp plans for integrated systems [irrespective of third party contracting arrangements] need to have a physician-driven process to oversee quality and utilization across specialties. Given that reimbursement is likely to be an "experimental science" for some time to come, it is impractical to change plans according to third party, risk arrangements. When I spoke to a number of more mature and well-developed , integrated health systems on the topic, I received a relatively common response. "We disconnect how the physicians are compensated from how the IHS is paid for services. Utilization management is a product of organizational design, operating phiosophy and physician leadership. We want utilization managed appropriately regardless of how the organization is paid or how the physicians are compensated."

That said, these organizations also speculated that internal compensation designs will address primary care and the specialties differently within integrated organizations. More than one interviewed speculated that primary care may become more of a "team sport" with more of total cash comp paid as salary [with incentives based upon quality and performance of the patient panel and team] while specialties [especially procedural] may continue with more of a production-based model.

Hope this is helpful. Best!