Physician Earnings: Modest Increase but Frustration Remains

Carol Peckham


April 21, 2015

In This Article

The Payment Model Pandemonium

A 2015 RAND report provided a comprehensive view of the current state of several payment models, including retainer services and ACOs' many payment programs, such as capitation, episode-based and bundled payment, shared savings, and pay-for-performance.[11] The report's findings on the effects of alternative payment models ranged from neutral to positive. No practice in its sample saw major financial hardships as a result of new payment models, and in general, the alternative payment models had negligible effects on the income of individual physicians.

Still, the report found a number of factors limiting the effectiveness of these models, including more complex administrative systems, EHR and data inconsistencies, and tensions caused by lack of alignment between the many performance measures and payment incentives from both private and public payers.

And the impact on individual physician practices could be extremely negative, particularly the "two-canoe" problem, in which many practices must balance the transition from fee-for-service to the newer performance-based payment models with their conflicting incentives. According to the RAND report,[11] the impact of pay-for-performance "on physician practices is dampened by the fact that different health plans apply a cacophony of performance metrics, particularly given the small financial amounts typically involved." The report found no instances in which pay-for-performance payments had any substantial effect on a practice's financial viability, and both physicians and medical directors expressed skepticism about whether such programs would improve care.

Accountable Care Organizations

The current Medscape report asked physicians about their participation in accountable care organizations (ACOs), which has continued to rise dramatically—from 3% in 2011 to 30% in this year's report. More PCPs are in or expect to participate in ACOs (43%) this year vs the general population of physicians (37%). It should be noted that there are many different ACO practice and payment arrangements. Regional considerations also have an impact on physician ACO participation.

According to the RAND report,[11] "ACOs are more likely to form in areas with high proportions of hospitals affiliated with integrated delivery systems, and larger practices and those with more-extensive care management processes were more likely to have joined ACOs." This is supported in the Medscape survey when looking at percentages of physicians who are participating in ACOs by state. The smallest percentages tend to be in the less populated and/or more rural states, and the highest are in those with more advanced healthcare systems (Figure 3).

Figure 3.

Physician participation in ACOs by state.

Concierge and Cash-Only Practices

Despite considerable publicity, cash-only and concierge (also called retainer) practices are still not significant payment models.[12,13] In fact, according to Medscape survey respondents, concierge practices stayed level at only 3% since last year, and cash-only even dropped a percentage point.

PCPs account for almost the same rate of concierge (4%) and cash-only (5%) practices as the general physician population (3% and 5%, respectively), although interest in direct primary care is specifically growing among family physician leaders.[14,15] (Direct primary care is not the same as concierge primary care, but it also employs an alternative to fee-for-service insurance billing by charging a retainer for a full range of services.) Nevertheless, other reports suggest that the trend in concierge practice is growing. Annual fees can range from as low as $1400 to as high as $25,000, although it is not clear whether average physician income is any higher than in conventional practices. It should be noted that very little evidence exists yet on the impact of concierge practices.[11]


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