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Plans and Packages for Physician Compensation
Written by Amy Lillard   
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Plans and Packages for Physician Compensation
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These components account for the distinct pros and cons with these plans. Productivity-based compensation encourages individual physician effort, and if done correctly, rewards it. Efficient? Effective? You get paid for it. But this compensation model also creates a highly competitive and occasionally destructive environment among colleagues. Physicians may compete over numbers of patients, but also types of patients. This model is also a nightmare for administrators and accountants – complex formulas and miniscule details become a medical office manager’s day.

Some productivity models also incorporate capitation. This term refers to prepaid healthcare premiums, distributed to provider groups for coverage of a defined population. Health plan payments are allocated to physicians by some sort of productivity-based formula. Under this system, groups and physicians that provide cost-efficient and effective care are rewarded. But income can wax and wane, depending on the marketplace and other factors. And, like other production models, patients may feel the pain of physician competition. This plan can encourage defferential treatment from physicians based on a patient’s ability to pay. Their focus has the potential to shift away from appropriate patient care for all.  

Depending on the organization, location and philosophy, physician compensation packages have the ability to vary widely. New physicians, and those changing positions, should consider each compensation package carefully for how it will affect his or her performance, work dynamics, and satisfaction.  

Sources for this article include:

Greenfield, William R. In Search of an Effective Physician Compensation Formula. Family Practice Management

Tarantino, David P. Determining Physician Compensation – Part I – Nuts and Bolts of Business. Physician Executive


About the Author

Amy Lillard was a regulatory and marketing professional at the Feinberg School of Medicine at Northwestern University for 4 years prior to writing on healthcare topics.

The author discloses no financial conflicts of interest with the content of this article. 

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