While hospitals and healthcare systems are operating in a turbulent economic environment after the COVID-19 outbreak, the need for standard, cost-based physician compensation plans has intensified.
Even before the coronavirus pandemic, the median loss of surgery for physicians in the healthcare system remained severe. Many factors contribute to the financial losses of working doctors – the costs associated with on-board doctors and ramp-up, management, revenue cycle, and other surgical costs. (from administrative and billing support to technology and supply chain costs); that all this affects the end result of the medical business; but physician compensation is typically the largest line item on the physician enterprise P&L.
The shift to amount-based payments, although slower than expected, is still ongoing. Although 56 percent of healthcare organizations participated in cost-based contracts and only 34 percent of payments were tied to an amount, the extent to which a payment is directly tied to quantity is still declining. experience during COVID-19.
The rapid pace of consolidation has led to closed healthcare systems and, in some cases, separate service lines. Physician compensation can be an obstacle to service line integration; Without standardized compensation plans and the ability to link physician compensation to the quality and cost of care, adapting physician performance within integrated service lines, thereby reducing patient leakage, has become a daunting task.
Before the pandemic, almost 44% of physicians reported burning sensations. The American Medical Association has expressed concern that the number of physician burnout is rising during the coronavirus pandemic. Burnouts can be dangerous and contagious and can affect continuity and ultimately successful recruitment efforts. With COVID-19 comes a serious disruption of elective procedures, how much primary care and special care – a scenario no physician compensation plan could have anticipated. With operating losses per physician already on an upward trend, organizations must consider whether to act to address only the issues faced in 2020, or whether now is the time to restructure compensation to de-emphasize productivity measures and continue the evolution towards next-generation value-based compensation models.
As organizations work to address pandemic issues and see the impact on every physician and the entire medical industry, they should also begin the necessary work of moving away from entirely productivity-based compensation models towards those that reward efforts at succeeding in a value-based environment.
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