Address correspondence to James C. Robinson, Ph.D., University of California, Berkeley, School of Public Health, 140 Warren, Berkeley, CA 94720-7360. Stephen M. Shortell, Ph.D., is Blue Cross of California Distinguished Professor of Health Policy and Management, and Dean, School of Public Health University of California, Berkeley. Rui Li, M.M., is a graduate student, Health Services and Policy Analysis University of California, Berkeley. Lawrence P. Casalino, M.D., Ph.D., is Assistant Professor, Department of Health Studies, The University of Chicago. Thomas Rundall, Ph.D., is the Henry J. Kaiser Professor of Organized Health Systems Division of Health Policy and Management, University of California, Berkeley.
The Alignment and Blending of Payment Incentives within Physician Organizations
Article first published online: 26 AUG 2004
Health Services Research
Volume 39, Issue 5, pages 1589–1606, October 2004
How to Cite
Robinson, J. C., Shortell, S. M., Li, R., Casalino, L. P. and Rundall, T. (2004), The Alignment and Blending of Payment Incentives within Physician Organizations. Health Services Research, 39: 1589–1606. doi: 10.1111/j.1475-6773.2004.00305.x
This study was funded by the Robert Wood Johnson Foundation.
- Issue published online: 26 AUG 2004
- Article first published online: 26 AUG 2004
- Payment incentives;
- medical group;
- independent practice association
Objective. To analyze the blend of retrospective (fee-for-service, productivity-based salary) and prospective (capitation, nonproductivity-based salary) methods for compensating individual physicians within medical groups and independent practice associations (IPAs) and the influence of managed care on the compensation blend used by these physician organizations.
Data Sources. Of the 1,587 medical groups and IPAs with 20 or more physicians in the United States, 1,104 responded to a one-hour telephone survey, with 627 providing detailed information on physician payment methods.
Study Design. We calculated the distribution of compensation methods for primary care and specialty physicians, separately, in both medical groups and IPAs. Multivariate regression methods were used to analyze the influence of market and organizational factors on the payment method developed by physician organizations for individual physicians.
Principal Findings. Within physician organizations, approximately one-quarter of physicians are paid on a purely retrospective (fee-for-service) basis, approximately one-quarter are paid on a purely prospective (capitation, nonproductivity-based salary) basis, and approximately one-half on blends of retrospective and prospective methods. Medical groups and IPAs in heavily penetrated managed care markets are significantly less likely to pay their individual physicians based on fee-for-service than are organizations in less heavily penetrated markets.
Conclusions. Physician organizations rely on a wide range of prospective, retrospective, and blended payment methods and seek to align the incentives faced by individual physicians with the market incentives faced by the physician organization.