Most doctors paid by quantity of patients — not quality of care

SANTA MONICA, Calif. — Entering the medical field is a noble endeavor, and the vast majority of doctors, surgeons, and nurses will tell you they chose their career path to help people. Unfortunately new research suggests most physicians employed in group practices owned by health systems make more money by focusing on quantity over quality. In other words, it doesn’t matter if the patients are property treated, cured, or fully recovered. Physicians are paid based on volume of care and services offered, not quality.

Study authors from the Rand Corporation analyzed a large collection of medical practices owned by health systems, discovering that volume-based compensation is the most typical base-pay arrangement among over 80 percent of considered primary care doctors. That number balloons to 90 percent of physician specialists. Meanwhile, despite it being fairly standard for other financial incentives, such as quality and cost performance, to be included in these health systems as well, such financial rewards were much more modest, only accounting for a meager nine percent of compensation for primary care providers and five percent for specialists.

“Despite growth in value-based programs and the need to improve value in health care, physician compensation arrangements in health systems do not currently emphasize value,” says lead study author Rachel O. Reid, a physician policy researcher at RAND, a nonprofit research organization, in a statement.. “The payment systems that are most-often in place are designed to maximize health system revenue by incentivizing providers within the system to deliver more services.”

Recent years have seen both private and public payers enact payment reforms aimed at encouraging doctors to both improve care quality and slow down spending growth. The idea being to produce more value for the patients. Simultaneously, both the size of health systems and the number of employed physicians has increased dramatically.

Volume-based incentives account for most of doctors’ pay

To investigate if current compensation structures in place for doctors resemble payment reforms focusing on value, researchers analyzed physician payment structures across 31 clinics affiliated with 22 distinct health systems in four U.S. states. Organizational leaders were interviewed, compensation-related documents were analyzed, and physician practices were reviewed. This was all performed to get a better sense of compensation arrangements among various primary care doctors and specialist physicians.

A number of interesting findings became apparent. To start, if a doctor wanted to start making more money, the most common tactic was to start seeing more patients and increase their number of offered medical services. In all, 70 percent of included practices followed this approach. Among these practices, volume-based incentives accounted for over two-thirds of their compensation.

As touched on before, it is true that performance-based financial incentives such as clinical quality, cost, patient experience, and access to care, also factor into compensation totals. Yet these considerations only facilitate a small fraction of most primary care and specialist doctors’ total earnings.

Unfortunately, and in a complete contradiction of the entire purpose of medical care in the first place, study authors conclude most U.S. doctors have little financial incentive to spend significant time making sure a single patient receives the absolute best possible treatments and care available. Conversely, 70 percent of physician organization leaders flat out admit that the best way for doctors to increase their profits is to simply offer a greater array of medical services.

“For the U.S. health care system to truly realize the potential of value-based payment reform and deliver better value for patients, health systems and provider organizations will likely need to evolve the way that frontline physicians are paid to better align with value,” Reid concludes.

The study is published in JAMA Health Forum.