Physician Incentives in Michigan FQHCs 2013

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There are some people running around talking up productivity incentives for providers — in fact, they are telling you that you “have” to have them in order to attract and retain physicians, and that “everyone has one.”  Before you listen too carefully to what they have to say, ask yourself if they have a stake in whether you’re paying incentives or not.  After you’ve done that, ask for something that a lot of folks don’t necessarily want to do — provide you with actual data to back up their claims.

Let’s start off with something that’s been researched to death.  While a productivity incentive program may succeed in paying more to providers with higher productivity in an FQHC environment, it does not provide long term change in productivity, and it is not magically going to make your low-productivity providers suddenly turn into cash cows.  Most health care professionals are not motivated primarily by money, and that will hold even more true for those who choose to work in an FQHC long term.  What the programs will do is increase your costs, and likely not provide much in the way of results. Obviously this is a generalization — in some situations productivity incentives do work, but it takes both the right kind of organization and the right type of plan to actually get results. Consider also that it appears that we are moving to a model where health care providers will be expected to focus on outcomes rather than visits, and productivity or “piece work” incentives run completely counter to that philosophy.

Now let us move on to data, in the case, the just released results of our study of compensation among FQHCs in the State of Michigan, conducted for the Michigan Primary Care Association.  The survey participants are a good sample of the demographics of the state; the participants are spread geographically throughout Michigan, in urban and rural areas, and half have more than $10 million in revenue (about a quarter are more than $20 million).  Quick summary — base salary makes up at least 97% of the total compensation paid to every one of the 16 provider positions studied, including dental, medical, behavioral health and pharmacy. More than half of the 24 participating FQHCs (representing about two-thirds of the MPCA membership) only pay a base salary to their providers. Less than a quarter have a “productivity-only incentive,” and the remainder have some other type of incentive (which may include productivity).  The apparent popularity of incentives (albeit less than 45%) belies the fact that there isn’t a lot of money in them.  Incentives of all types average less than four percent of base pay.  At the median, incentives have essentially no impact on total compensation.  The results of the 2013 survey are consistent with the 2012 results; the prevalence of incentive plans is about the same, while payments from them are down slightly.

At ElementOne we’re working with several FQHCs who are moving away from incentive plans; they’ve realized that productivity can be effectively rewarded in a base salary model that also takes into account many other important performance measures.  Moving to a base pay method also eliminates many of the technicalities and headaches incentive plans cause (adjustments for EHR implementation, accounting for paid time off or CE, complaints about practice management software, or even alleged favoritism by schedulers).

Incentives may work for your organization, but don’t be tricked into thinking they are either essential or a major part of physician compensation in the FQHC world.