Physician incentives have long served as a way to improve patient outcomes and manage costs. But, a Dec. 3 article by the Association for Physician Leadership reportedly found several things that systems can do to improve the design of their incentive programs.
Here are five takeaways from the article:
1. AAPL notes that hospitals can narrowly structure physician incentives around specific improvements, such as switching to lower cost supplies or reducing a patients' length of stay. But, when possible, systems should focus on "broader" targets when designing incentives, like reducing costs for a specific type of procedure or treatment course.
"This broader scope empowers physicians to explore opportunities to reduce costs that are not limited to pre-determined initiatives," according to the article. "It increases physicians' sense of autonomy and discretion and leverages their expertise to identify ways in which costs can reasonably be managed without compromising quality."
2. AAPL also recommends incorporating elements of both individual- and team-centered incentive programs. It contends that team-based goals foster a "sense of mutual accountability since each physician's performance impacts everyone's earnings potential."
Individual physicians may also be rewarded for their contribution to net savings. For example, an individual physician might have discretion over whether to use more or less-expensive versions of various supplies when they are equally clinically effective for a patient.
3. AAPL also recommends providing incentives for achieving reductions over time. They cite frequent tensions between physicians and administrators over when savings are shared, and suggest that the amount paid out each year should reflect "that it gets harder to achieve further savings as costs progressively decrease." Institutions could, for example, share an incrementally larger percentage of incremental savings.
The group also recommends providing a smaller incentive for maintaining a given cost level. This can help prevent future cost increases that can occur after programs conclude and physicians return to older, less sufficient practices. The amount of ongoing incentive should also be calculated based on how much work it is for physicians to maintain that level of spending. One way to do this, according to AAPL, is by basing the incentive structure on the hospital's cost levels relative to a certain benchmark.
4. AAPL writes that the appropriate amount of shared savings should depend on the individual physician's compensation as well as any "incremental costs" that they might incur to implement the changes that would ultimately lead to savings, such as reductions in surgical productivity due to learning curves. It suggests a general range of about 5% to15% of a physicians' compensation.
5. Alternative incentives might also include sharing potential savings with a physician's department so that they can fund initiatives, programs or training opportunities that reflect their own interests. Physicians may also be interested in non-monetary benefits such as protected time for research or more time to spend with their families.