Physician compensation in transition. The market-based alternative

Current compensation systems are not working for the new and emerging models of health care systems. While there is not a perfect solution, there are alternatives that should be considered. The dynamics that are influencing compensation include: consolidation and integration are creating tighter group infrastructures than have previously existed--groups must place greater emphasis on the manner in which physicians function in support of common goals; the regulatory environment has increased due to the Stark legislation; the marketplace is a force in super-specialties and primary care physician compensation; and managed care is demanding new methods of compensation. Market-based compensation is attracting interest because of the complexity of external pressures. It is defined as the relationship between productivity and compensation and utilizes external benchmarks. Future market-based compensation plans will have five main components: productivity, as measured by dollars or RVUs; resource utilization, as service becomes a cost that is debited against capitated revenue; outcomes will be fundamental; service ratings will be instrumental; and physician "citizenship" will garner a higher profile.