Geisinger Health System is a physician-led, not-for-profit, integrated delivery system serving an area with approximately 2.6 million people in northeastern and central Pennsylvania with innovative products and services designed to drive higher performance. Geisinger is known for providing high quality care at low cost. How do they do it? Is it how they incentivize physicians? Today I review a paper by Lee, Bothe and Steele (2012) that explains how Geisinger compensates its employee physicians.
On average, physicians receive 80 percent of their paycheck as base salary. Base salary is defined for each physician according to factors that describe his or her expected work effort. “These factors include teaching, research, and administrative activities, but for most clinicians, this work effort is measured predominantly by a metric known as work relative value units.”
The remaining 20 percent of salaries are based on specific incentives. “For specialist physicians, incentive payments depend on work in the following five general areas: quality (40 percent), innovation (10 percent), legacy (10 percent), growth (15 percent), and financial (25 percent). The legacy category pertains to pursuit of Geisinger’s educational and research missions. The growth category pertains to increasing the population that Geisinger serves. The financial category directly reflects units of work recognized under fee-for-service contracts during the prior six months…The quality metrics (40 percent of the total incentive pool or 8 percent of total compensation) are defined for each specialty through iterative discussions between specialty leaders and Geisinger senior management. On average, physicians have four to five specific measures that determine the proportion of the reward for quality achieved.”
Primary Care Physicians
“The incentive compensation system for primary care physicians has similar features but a slightly different structure. The base salary constitutes 78.5 percent of the total pay and is adjusted every six months, based upon the fee-for-service work units produced during the previous twelve months. Physicians receive about 8 percent of pay on the basis of active participation in Geisinger’s medical home model of care delivery. The remaining 13.5 percent is divided among quality (60 percent), citizenship (6 percent), and financial performance (34 percent). In this context, citizenship refers to clinicians’ collaboration and teamwork with colleagues.” Quality measures both patient satisfaction and publicly reported quality metrics.
- Thomas H. Lee, Albert Bothe, and Glenn D. Steele. How Geisinger Structures Its Physicians’ Compensation To Support Improvements In Quality, Efficiency, And Volume. HEALTH AFFAIRS 31,NO. 9 (2012): 10.1377/hlthaff.2011.0940
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