A growing number of hospitals and group practices are offering incentives for physicians, according the 2010 Physician Compensation Survey by Hay Group, which also found that incentives are increasingly tied to patient satisfaction and quality measures.

The survey found that 92% of group-based organizations are offering offer incentive plans to their physicians, up from 75% in 2009, and that 63% of hospitals now offer incentives, compared with 51% in 2009. Meanwhile, the percentage of integrated health systems offering physician incentive plans remained steady between 2009 and 2010 at 67%. Of the 28 organizations that responded that they had no physician incentive plans, 39 percent said they were considering them.

“There is safety in numbers, and it has never been truer in healthcare than it is now,” says CJ Bolster, national director for Hay Group’s healthcare practice. “Integrated health systems have scale and they can offer job security in lieu of having to offer higher incentives. Group practices that are not directly tied to a hospital or system will traverse a bumpier road in the post-reform era, but they will continue to attract physicians with an entrepreneurial drive and an acceptance of risk.”

Incentive plans are increasingly being tied to performance metrics, with ‘patient satisfaction’ and ‘quality’ being the leading factors for all surveyed organizations. According to Hay Group, 50% of group-based practices tie incentives to patient satisfaction and quality, compared with 43% of hospital-based organizations and 46% of integrated health systems.

“No one should be surprised that healthcare organizations are moving to link pay to performance,” says Ron Seifert, executive compensation practice leader for Hay Group’s healthcare practice. “Hospitals will increasingly be rated on performance metrics such as patient satisfaction, readmissions and clinical outcomes, and reimbursements are likely to be linked to these as well. Financially, it’s in an organization’s best interest to embrace these changes now, rather than waiting for all the reform dust to settle. Communally, a hospital focusing on the needs and health of patients is good for everyone.”

Base salary increases remain virtually flat in hospital-based organizations, with 2.8% increases in 2009-2010, and 2.9% expected increases for 2010-2011. Group-based physician practices offer higher salary increases (4.8% granted in 2009-2010), but the planned base salary increases for 2010-2011 dropped to 3.3%.

Salary structures and salary planning for physicians remain flexible in 2010, according to the survey, which showed that half of hospitals and integrated health systems and 54% of group-based physician practices say that their process is ‘independent,’ meaning that they have a philosophy and structure, but that positions, specialties, departments and specific doctors are reviewed individually for their salary potential and subsequent increases.

To access “Figures from the 2010 Hospital Prevalence and Planning Report,” click here, and to review “Figures from the 2010 Integrated Healthcare Systems Prevalence and Planning Report" from the survey, click here.

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