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

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.