Aligning incentives in orthopaedics: opportunities and challenges -- the Case Medical Center experience

For 30 years, the orthopaedic faculty at Case Western Reserve University worked as an independent private corporation within University Hospitals Case Medical Center (Hospital). However, by 2002, it became progressively obvious to our orthopaedic practice that we needed to modify our business model to better manage the healthcare regulatory changes and decreased reimbursement if we were to continue to attract and retain the best and brightest orthopaedic surgeons to our practice. In 2002, our surgeons created a new entity wholly owned by the parent corporation at the Hospital. As part of this transaction, the parties negotiated a balanced employment model designed to fully integrate the orthopaedic surgeons into the integrated delivery system that included the Hospital. This new faculty practice plan adopted a RVU-based compensation model for the physicians, with components that created incentives both for clinical practice and for academic and administrative service contributions. Over the past 5 years, aligning incentives with the Hospital has substantially increased the clinical productivity of the surgeons and has also benefited the Hospital and our patients. Furthermore, aligned incentives between surgeons and hospitals could be of substantial financial benefit to both, as Medicare moves forward with its bundled project initiative.