Matching physician compensation plans to capitation levels

As managed care penetration increases, physician compensation plans need to reflect the current transition from fee-for-service to capitated payment. In choosing the compensation structure that will be most beneficial to the success of the group practice and secure physician buy-in, practices need to assess their mission, goals, and corporate culture. They also need to assess their percentage of capitation to total revenues and develop, when necessary, new compensation pools that reward physicians for a variety of behaviors, such as increased productivity and utilization control. Compensation plans should be fair, flexible, and simple to understand and administer.