As it aggressively moves into population health management and value-based payment arrangements, UnityPoint Health is reworking its physician compensation plan to align physician incentives with the system’s goals.
UnityPoint Health, serving nine large markets across Iowa, Illinois, and Wisconsin, set its sights on population health management and value-based contracts in 2012 and hasn’t looked back.
Last year the organization transitioned to the federal government’s Next Generation ACO program, and in 2015 it reported $6.2 million in shared savings from three value-based contracts with commercial insurers. This year’s work plan includes expanding its participation in value-based contracts and preparing to perform in contracts with downside financial risk.
Such a business strategy requires replacing the health system’s physician compensation model, which incentivizes about 500 employed physicians to increase their wRVUs, says Keith Seashore (pictured at right), executive vice president and CFO, UnityPoint Clinic. “Clearly, we need to be able to manage the cost of care, and the current model we have in place is not 100 percent conducive to supporting that strategy,” he says.
UnityPoint Clinic, the integrated, multispecialty medical group of UnityPoint Health, is pilot-testing a compensation model that rewards physicians based on patient satisfaction, compliance with quality protocols, and other factors. The goal: to move all physicians to a new plan—with a third of compensation based on salary, a third on productivity, and a third on value-based metrics—by 2020.
“Physician alignment work is so important that getting these compensation plans redesigned is one of our top 20 priorities across the organization for the year,” Seashore says. “This is not corner-of-the-desk work.”
Part of a Trend
UnityPoint Health is one of many leading health systems that are rethinking physician pay to support population health management and payer contracts that hold them accountable for cost, quality, and patient satisfaction.
As such contracts account for a larger portion of a health system’s revenues, the physician compensation model becomes more important, according to Phyllis Floyd, MD, a senior advisor at BDC Advisors. “Employed physician compensation models based primarily on productivity are now lagging payer reimbursement changes,” she writes in a 2014 article. a
The theory behind value-oriented compensation models is that they incentivize physicians to embrace an employer’s goals to improve quality, patient experience, and efficiency. One noteworthy adopter of the strategy is Mayo Clinic Health System, which implemented a new physician compensation model in 2014.
In the first year of the new program, only 5 percent of a physician’s compensation was tied to performance—but that was sufficient to convince Mayo leaders they were on the right track, according to a case study published in hfm: “The results … strongly indicate that significant gains can be achieved in physician performance on value-based practices even when a relatively small percentage of compensation is at risk. Each value-based measure saw improvement from 2013 (the baseline year) to 2014, the first year of active implementation.” b
The UnityPoint Clinic Plan
UnityPoint Clinic has incorporated quality metrics in its compensation plans for some time, but productivity has been given much greater weight. Currently, productivity accounts for 86 percent of compensation for the group’s primary care physicians, with value-based performance metrics accounting for the remaining 14 percent. For specialty physicians, 9 percent of compensation is based on performance metrics.
Since January 2016, five primary care clinics have been pilot-testing the new compensation formula, which gives equal weight to straight salary, productivity, and value metrics.
“We are basically saying that production and value-based performance metrics are equally important,” Seashore says. “And to do well under this new compensation plan, you need to manage both well.”
The one-third of compensation tied to productivity includes two components:
- wRVUs (the standard productivity measure)
- Panel size
The one-third of compensation that reflects value-based performance breaks down this way:
- 40 percent: standard quality metrics such as compliance with preventive screening and diabetes care protocols
- 25 percent: patient experience scores
- 20 percent: financial metrics, including timely chart completion and participation in online education modules about how physicians can help manage the total cost of a patient’s care and succeed in value-based contracts
- 10 percent: care coordination, currently measured by readmission-rate reduction
- 5 percent: citizenship, currently measured by meeting attendance
The specific measures used in each category are expected to change periodically based on the health system’s priorities, Seashore says.
In the first year of the pilot, the theory behind value-based compensation appeared to play out in practice.
“Their value-based performance metrics did improve when we put more of the compensation at risk,” he says. “So the results were what we were expecting and hoping for.”
UnityPoint Clinic has a 30-member, physician-led compensation committee that advises senior leadership. A couple of years ago, that committee started the prep work needed to create a new compensation program.
“They stepped back to review what our philosophical principles for compensation were and how to align those with what we will need in the future to succeed in value-based care,” Seashore says.
UnityPoint Clinic also hired two part-time physician compensation medical directors. One director is the liaison to primary care, responsible for gathering feedback about the primary care pilot and communicating the feedback to senior leadership. The other will help review various specialty-compensation plans and design a new model.
“We want perspectives from the physicians in terms of what they feel is important,” Seashore says. “And having practicing physicians help us frame and develop those plans for the future is going to help us get it right.”
UnityPoint Clinic has taken its time with this initiative. The organization started working on its new compensation model in 2015, and Seashore expects a five-year transition to value-based pay. Some physicians who found it easy to succeed in the old plan may struggle to adjust, so implementation needs to be paced carefully. “You need to have a transition plan that might take a year or two to roll through once you’ve got your new model figured out,” he says.
Lola Butcher writes about healthcare business and policy topics for several HFMA publications.
Interviewed for this article: Keith Seashore, executive vice president and CFO, UnityPoint Clinic, West Des Moines, Iowa.
a. Floyd, P. “ Roadmap for Physician Compensation in a Value-Based World,” Physician Leadership Journal, Sept-Oct 2014.
b. Bunkers, B., Koch, M., Lubinsky, J., et al., “ Value-Based Physician Compensation: A Link to Performance Improvement,” hfm, March 2016 (HFMA login required)