New compensation model improves physician productivity

In the mid-1990s, Meridia Health System, a hospital system in the Cleveland, Ohio, area began acquiring primary care physician practices to form the core of an integrated delivery system to compete with other providers in the area. Unfortunately, the structure of the physician compensation plan for Meridia's new physician employees caused productivity to decline and losses to mount. Meridia appointed a task force that included physicians to develop a new compensation plan that bases pay on the application of a collection rate percentage to each physician's gross fee-for-service billings. While not perfect, the new compensation plan is helping both Meridia and its physicians achieve their mutual goals of high-quality care, reasonable productivity, and operating efficiency.