The Ever Changing World of Quality-Based Incentive Compensation
I work with clients daily who are trying to best prepare themselves by implementing quality-based incentive compensation into their physician alignment strategies. As healthcare reform continues to be better understood and begins to be implemented, it is critical that hospitals understand how these bonuses/penalties will work.
The clients I work with are prone to latch on to the concept of a 1% to 2% bonus for quality outcomes, citing Pay for Performance and similar programs. However, the industry is moving away from a “carrot” and more to a “stick.” Healthcare reform will continue this movement. I found an interesting article that lays out the direction of quality-based incentive compensation in the future.
For hospitals that want to be on the forefront of the quality-based incentive compensation movement, it is important to start now by:
- redesigning metrics based on outcomes;
- requiring improvement year to year to continue earning incentive; and
- incorporating down-side as well as up-side criteria in the agreement.
