The Achilles Heel of Group Practices

Kenneth J. Terry, MA


August 18, 2011

In This Article

Compensation Battles

In most group practices today, compensation is based partly or wholly on productivity. That eliminates the problem of some people receiving more than others for the same work. However, especially in primary care, it can lead to the kind of treadmill, throughput-driven medicine that dismayed Singh.

“In private practice, my productivity has to be sufficient so I can pay my bills, pay my staff, and pay myself," notes Kenneth Hertz. "But if I'm part of a group practice, many groups have standards of performance. It may be based on RVUs [relative value units] or numbers of visits per day. There may be rules and regulations about length of office visits. All of this has the potential to impact my practice pattern."

This is only the beginning. An increasing number of large- and even medium-sized groups are factoring doctors' scores on quality measures into their compensation, says Curt Mayse, a consultant with LarsonAllen in St. Louis, Missouri. He estimates that quality scores now determine 10%-30% of compensation in many groups. Therefore, group physicians must be willing to accept evidence-based clinical guidelines.

Multispecialty groups also have a traditional conflict between primary care doctors and specialists: the primary physicians feel they are being underpaid, considering that they generate referrals to the specialists, and the specialists see the primary care doctors as underperformers who have to be subsidized.

In the past, the specialists generated those subsidies by diverting some of their ancillary revenues to the primary care physicians, Mayse observes. Now, however, ancillaries are less profitable than they used to be, so there is less of a surplus to split with the primary care physicians. "It is creating more tension within groups as they figure out how to divvy up the dollars," he says.