Physician compensation is up. But productivity isn’t.
Value-based incentives for physicians are growing, but they still constitute a small percentage of total cash compensation for most specialties, reports Chicago-based SullivanCotter, a consulting firm in the assessment and development of rewards programs for the healthcare industry and non-profit sector. What’s more, even as market supply-and-demand for physicians continues to drive increases in compensation, physician productivity is stagnant.
From 2018 to 2019, the prevalence of value-based incentives, which rewards performance on measures such as clinical quality, patient experience and access, increased by 5-7% across all four major specialty categories:
- For primary care, the prevalence of value-based incentive components in plan design was up 5% from last year, with 62% of organizations incorporating these incentives into their physician compensation programs.
- Medical, surgical and hospital-based specialties all fell in the range of 55-57%.
The actual amounts paid for value-based performance remain relatively small, at 6.2% of total cash compensation across all specialties at the median, according to the firm. However, this is up from 5.6% in 2018. Primary care is highest at 7% of total cash compensation, with hospital-based specialties following at 6.3% and medical and surgical specialties at just below 6%.
“We expect to see continued growth in value-based incentives as organizations work to further develop and refine these programs to ensure they have credible measurement and reporting systems in place before moving forward,” said Mark Ryberg, principal, SullivanCotter.
Despite continued year-over-year increases in median compensation across all major specialty categories, productivity remains relatively flat and in many cases is even declining.
From 2014-2019, median total cash compensation for primary care physicians increased by 14.7% (reflecting a growing demand for primary care providers by healthcare organizations), but work RVU (wRVU) productivity declined by 0.2%, according to SullivanCotter. (Work RVU reflects the relative time and intensity associated with furnishing a Medicare Physician Fee Schedule service.)
Over the same five-year time period, hospital-based physicians saw the largest growth in median wRVU productivity at 5.2%. This was the only major specialty group to see an increase greater than 1.5%.
“With growing concerns regarding provider supply and demand, organizations are evolving their compensation programs to align with an increasingly competitive talent market,” said Dave Hesselink, principal, SullivanCotter, in a statement. “With a looming physician shortage placing pressure on organizational recruitment and retention strategies, this demand continues to push physician compensation upwards without being supported by corresponding gains in productivity or reimbursement – resulting in higher levels of organizational investment per physician.”
Released in December, SullivanCotter’s “Physician Compensation and Productivity Survey” is now in its 27th year. With data from nearly 700 organizations on more than 206,000 individual physicians and advanced practice providers, this survey is intended to provide insight into base salary, total cash compensation, and productivity data and ratios, including wRVUs, collections, patient visits and panel sizes.