Survey: Hospitals still rewarding docs for volume

June 20, 2011

Hospital leaders have done a good job talking about how they’re going to work with physicians to bring down costs while improving quality. But their recruitment patterns show they’re still incentivizing doctors for driving up procedure volumes.

According to the latest physician recruitment survey from Texas-based Merritt Hawkins, three-quarters of all physician searches include a performance bonus for the doctor. Fewer than 10 percent of those bonuses are tied to something other than volume of procedures.

“Though health reform encourages the use quality or cost based compensation metrics, few search assignments Merritt Hawkins conducted in 2010/11 featured such metrics,” Merritt Hawkins staff wrote in a summary of the survey. “Volume/production remains the standard.”

The survey is based on the nearly 2,700 physician searches Merritt Hawkins worked on from April 1, 2010 until March 31, 2011.

Most of these searches—56 percent—were conducted for hospitals, up from just 23 percent for hospitals five years ago.

Family practice and general internal medicine were the most common specialty searched for, the same as the previous five years.

In Indianapolis, the four major hospitals systems all have been employing more physicians, or pulling them in to tight agreements.

The latest example is Indiana University Health’s deal with Central Indiana Cancer Centers. IBJ reported last week that IU Health purchased the oncology practice’s five locations and took on its 150 staff members. The 16 physicians connected with the practice remain independent but have signed a service agreement to provide cancer care within the IU Health system.

IU Health also has more than 500 employed physicians. And Indianapolis-based Community Health Network has more than 550 employed physicians.

The federal Medicare program is creating an accountable care program in which it will pay bonuses to hospital-doctor groups that demonstrate high-quality care and also save money while taking care of a specific group of Medicare patients.

But those payment arrangements will not begin until 2012, and private health plans likely will follow later than that. In the meantime, hospital systems get paid based almost entirely based on the number of procedures performed in their facilities.



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