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How Geisinger structures its physicians' compensation to support improvements in quality, efficiency, and volume.

Thomas H Lee¹, Albert Bothe, Glenn D Steele

¹Partners Healthcare System, Partners Community HealthCare, Geisinger Health System Foundation, USA. thlee@partners.org

Health Affairs (Project Hope)

|September 6, 2012

Summary

Geisinger Health System incentivizes physicians with 20% of compensation tied to quality, efficiency, and volume. This approach enhances care value while maintaining financial viability through fee-for-service.

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Area of Science:

Healthcare Management
Health Economics
Physician Compensation Models

Background:

Increasing numbers of US physicians are becoming employees, shifting focus to new compensation models.
There is a growing need for payment systems that enhance quality and efficiency without negatively impacting productivity within fee-for-service frameworks.

Purpose of the Study:

To describe Geisinger Health System's innovative physician compensation strategy.
To evaluate the impact of incentivizing quality, efficiency, and clinical volume on healthcare value and financial viability.

Main Methods:

Geisinger Health System allocates approximately 20% of total physician compensation to performance-based incentives.
Incentives are designed to promote improvements in care quality and efficiency, alongside growth in clinical volume.
The majority of clinical care delivery and payment at Geisinger remains based on the fee-for-service model.

Main Results:

A moderate portion of physician compensation is dedicated to strategic goals like quality and efficiency improvements.
This strategy is associated with enhanced value of care delivered at Geisinger.
Incentives for clinical volume support financial viability, enabling the pursuit of the health system's mission.

Conclusions:

Geisinger's compensation model demonstrates a successful integration of quality and efficiency incentives within a predominantly fee-for-service system.
Dedicating a portion of compensation to strategic goals improves healthcare value.
The model supports both mission-driven care and financial sustainability.