Physician Productivity

Abstract

In the not-too-distant past, most physicians were paid by one of two ways: a fixed salary or by collecting fee-forservice charges. The former payment system was typical for physicians employed at academic health centers, larger integrated health care systems, commercial laboratories, and public hospitals, and for many hospital-based physicians. The latter payment system was typical of private practice groups, independent laboratories, and some hospital-based physicians. As the structure of health care reimbursement changed from 1980 to 2000, many physicians began changing to systems characterized by a guaranteed base salary with one or more variable salary components such as incentive, supplement, or bonus payments. Because the variable salary components were often used as incentives to modify physician behavior (eg, utilization of health care resources) or to increase productivity, there arose a need for the development and implementation of systems to track and analyze behaviors and productivity.Because of the structure of reimbursement systems at that time, this approach was primarily aligned with billable charges. The most widely used of these productivity measurements was the relative value unit (RVU) system, which attempted to assign units of productivity based on "relative values" of specific activities. Early on, this system made intuitive sense: most reimbursement during that era was based on fee-for-service systems, so increased productivity was directly related to increased charges and payments. Not surprisingly, important flaws in these systems quickly became evident: the incentive was to do as many procedures and perform as many tests as possible to maximize reimbursement, increasing utilization was a constant risk (even for unnecessary procedures and tests), and development of standardized approaches to account for nonbillable activities lagged behind. Moreover, because there was no incentive for physicians to do things that did not generate charges, not surprisingly these activities received less emphasis.As time passed, a number of changes in health care delivery occurred, all of which have the net outcome of driving utilization of tests and services downward. These included the emergence of managed care programs, growing awareness that keeping populations healthy through preventive measures resulted in decreased costs, adoption of best models of health care delivery around the world, and the growing use of evidence-based medicine. Through time, as these factors have matured and become widely adopted throughout health care, it has become apparent that the traditional approach of assessing productivity linked to billable services is fundamentally at variance with the concept of decreased utilization as part of contemporary health care.For pathology, as in many other medical specialties, the recent past has been characterized by important changes in practice. In many academic medical centers, large private practices, and reference laboratories, services increasingly are aligned with the need for sub...

Biased technical change in hospital care and the demand for physicians

“…Arguments that a compensation package based on productivity would mimic the fee-forservice payment schemes of the past which rewarded physicians as a function of the number of treatments and tests provided often overestimate actual physician productivity. Storfa and Wilson [8] also made a similar argument in favour of incentive payments based on relative value units (RVUs) which resemble health outcomes rather than healthcare outputs. In addition to incentive payments, there needs to be a better balance between workload and productivity because of the specialisation of service delivery.…”

“…Note that some of these enhancing measures have been discussed in earlier research. These range from using more measures, including services that are not billable [8], incentive pay [7,8], to positive productivity changes and identifying outcomes in terms of RVUs rather than the number of treatments and tests ordered as under fee-for-service [7].…”

Biased Technical Change in Hospital Care and the Demand for Physicians

“…Arguments that a compensation package based on productivity would mimic the fee-for-service payment schemes of the past which rewarded physicians as a function of the number of treatments and tests provided, often overestimate actual physician productivity. Storfa & Wilson (2015) also made a similar argument in favour of incentive payments based on relative value units (RVUs) which resemble health outcomes rather than healthcare outputs. In addition to incentive payments, there needs to be a better balance between workload and productivity because of the specialisation of service delivery.…”

“…Note that some of these enhancing measures have been discussed in earlier research. These range from using more measures, including services that are not billable (Storfa & Wilson, 2015), incentive pay (Andreae, et al, 2006) and ( Storfa and Wilson, 2015), to positive productivity changes and identifying outcomes in terms of RVUs rather than the number of treatments and tests ordered as under fee-for-service (Andreae et al, 2006).…”

Assessing physician productivity following Norwegian hospital reform: A panel and data envelopment analysis

“…Hospital productivity and efficiency have been studied extensively at the institutional level, both within individual health care systems and across different national systems. The approaches taken by these studies vary, with some using advanced techniques such as data M A N U S C R I P T A C C E P T E D ACCEPTED MANUSCRIPT envelopment analysis (DEA) and stochastic frontier analysis (SFA) and others relying on less advanced techniques (Castelli, Street, Verzulli, & Ward, 2015;Hollingsworth, 2008;Storfa & Wilson, 2015;Varabyova & Schreyogg, 2013). Some studies have examined efficiency within particular specialties and at the individual level (Askildsen, 2006;Bloor, Maynard, & Freemantle, 2004;Laudicella, Olsen, & Street, 2010;Romley, Goldman, & Sood, 2015;Schreyogg, 2008;Tiemann, 2008)).…”