Using compensation data to transition to value-based payment models

If you are considering transitioning your compensation plan to be more value-based, you might be feeling a bit daunted. Kevin Cope, MBA, CFA, director, and Anthony Werner, MBA, manager, health care, CliftonLarsonAllen LLP recently discussed tips for how a practice can approach this problem and what to consider when changing your compensation plan.

Both strongly recommend evaluating your current compensation model because healthcare is moving toward value-based compensation and it’s important to know how to adapt. “Productivity isn’t the only driver of compensation anymore,” said Cope. “As younger physicians enter the workforce, quality of life becomes more and more important.”

Werner agrees, “Lifestyle and convenience are becoming more and more important components of a compensation model and what drives physician behavior.”

Physician buy-in

Of course, the hardest people to convince when it comes to changing compensation models can be the physicians themselves. Werner and Cope recommend including physicians in the process from start to finish. 

“You have to have the physicians engaged with the process. Don’t just inform them of what’s going on but include them in the design of the model and let them lead goal setting,” says Werner. “And give them time to understand how the new model would affect them.” 

One of the best ways to do this, according to Cope and Werner, is to analyze your compensation data to create a model that is “fair” – to the organization, to the physicians, and within the market – and evaluate what metrics work best for your practice. 

Cope and Werner emphasize that there is not one superior model for value-based compensation and that each model should be unique to your group. But they do have a few tips on what makes a successful model. It should: 

• Be transparent and uncomplicated.
• Align compensation with performance.
• Recognize differences among specialties.
• Result in stable and predictable compensation.
• Maintain the ability to recruit high-quality providers.
• Comply with fair market value and be commercially reasonable.

More with less

With a value-based compensation model, Cope and Werner emphasize the need to find ways to do more with less. “The total cost of care is becoming more important,” said Cope. 

Some of their recommendations for doing this include transitioning from a physician-based model to a care team model, utilizing care team members to the top of their license, leveraging technology, and increasing panel size. 

Cope and Werner say that practices implementing a team model often see physician schedules start freeing up and increased productivity, which can lead to increased compensation. 

As the healthcare market changes and compensation becomes more closely tied with outcomes, “the ability to demonstrate high quality outcomes will become a market differentiator, allowing organizations to negotiate and receive more favorable reimbursement from payers,” according to Cope and Werner. So it’s worth evaluating your compensation model now.