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Physician Compensation Design for Primary Care


Academic medical center


To develop a consistent compensation model for primary care physicians that would incent clinical quality, productivity, and care coordination, while accounting for the medical center’s current payer arrangements. Challenges were posed by the need to integrate legacy practice and compensation models, with progressive practice models.


Veralon assessed the compensation models in place, including analysis of compensation levels, productivity levels, and quality measures for each physician. We held discussions with a work group of administrators. Veralon interviewed approximately 20 physicians and physician leaders to understand their perceptions of the models, the pros and cons of each, and the incentives and impacts of each.


We developed a standard compensation model in a collaborative and iterative process with the work group, taking the positive attributes from each compensation model and developing new components. The model included incentives for quality and productivity, and rewarded care coordination activities such as patient phone calls and care planning meetings with patients and families. This model positions the medical center to succeed during the shift to risk and value-based payment arrangements.

We then estimated expected compensation levels for each physician under the new model, based on prior productivity levels and performance. These estimates were compared to historical compensation levels. Outliers were reviewed with the work group and a transition plan was created.