Effects of compensation method on physician behaviors

To examine physician and leader perceptions of the relationship between physician compensation and the productivity of physicians practicing in medical groups.

Key informant interviews identified subjects' perceptions of factors influencing physician productivity and the behavioral effects of individual financial incentives. Interview transcripts were analyzed by a team of physicians, economists, and other researchers.

Physicians, medical leaders, and group practice administrators (n = 114) representing 46 medical group practices in California, Oregon, Washington, and Wisconsin were interviewed.

Five major themes emerged: (1) Most physicians reported that financial incentives did not substantially affect their own behavior, except for productivity. However, they suggested that specific compensation models do lead to certain seemingly undesirable physician behaviors. (2) By contrast, medical group leaders reported that financial incentives do affect a variety of physician behaviors. (3) Four productivity drivers emerged: financial incentives, demand-side factors, systems and infrastructure, and other individual or group attributes. (4) Physician compensation systems are evolving toward a blend of production-based and production-neutral incentives, plus new metrics aligned with the demands of managed care. (5) Culture, size, and specialty mix are significant determinants of group physician compensation systems.

Compensation method is perceived to be a significant influence on physician productivity, particularly among group practice leaders. The changing context of medical practice represents another powerful "macro" lever on physician behavior.