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ASC
MANAGEMENT
8 Key Notes on Physician Practices:
Just 33% Are Independent Practice Owners
By Laura Dyrda
T
he Physicians Foundation's "2016 Sur-
vey of America's Physicians: Practice
Patterns & Perspectives" found hospital
employment is rising, along with administra-
tive work and serious dissatisfaction.
Here are eight key findings from the report:
1. Just 33 percent of respondents were in-
dependent practice owners or partners; in
2012, that number was 48.5 percent.
2. More than half, 55 percent, of physi-
cians are participating in Physician Qual-
ity Reporting Systems and 75 percent par-
ticipate in some sort of patient satisfaction
survey.
3. ACOs have been much-discussed, but
currently only 36 percent of physicians
participate in an ACO.
4. ICD-10 went into effect about one year
ago, but only 6 percent of physicians re-
ported it improved efficiency at their prac-
tices; 42.5 percent said it detracted from
efficiency.
5. More than half, 54 percent, said their
morale is somewhat negative and only 37
percent said their feelings about the future
of the medical profession are positive.
6. Employed physicians see 19 percent
fewer patients than practice owners, a so-
bering trend as practice owners disappear.
Additionally, a recent study on hospital
employment from the Boston-based Har-
vard T.H. Chan School of Public Health
found hospital employment doesn't im-
prove patient care.
7. ere are only 17 percent of physicians
in solo practice, down from 25 percent in
2012.
8. Physicians report spending 21 percent
of their time on non-clinical paperwork.
Only 14 percent reported having the time
needed to provide the "highest standards
of care."
n
What This Year's Nobel Memorial Prize in Economics Means for
ACOs, Physician Compensation
By Emily Rappleye
T
wo economists were awarded the Nobel Memorial
Prize in Economic Sciences Monday for their work in
contract theory — work that could inform physician-
hospital, compensation and value-based care agreements.
The economists, Oliver Hart, PhD, a professor at Harvard,
and Bengt Holmström, PhD, a professor at MIT, help explain
how to better design contracts to improve output and align
incentives. The awarding body, Royal Swedish Academy of
Sciences, notes that contract theory cannot provide defini-
tive answers, but can help provide structure and evaluate
contract effectiveness.
For example, under pay-for-performance agreements, phy-
sicians are usually paid an incentive-based bonus on top of
fee-for-service compensation. These payments are based
on agreed-upon measures of quality and cost. Dr. Holm-
ström's work suggests payment under this type of structure
should be tied to the broadest possible measure of perfor-
mance. He argues that a manager's pay should not depend
entirely on his or her firm's share price, because this could
reward the manager for good or bad luck if an industry
is up or down. Instead, pay should be linked to the firm's
share price relative to the overall industry performance, ac-
cording to Dr. Holmström.
His work also demonstrates performance that is difficult to
measure should be compensated with a structure that is
more fixed. Likewise, pay should be more fixed if a person
is responsible for a variety of tasks. For example, physicians
could begin to focus too closely on improving specific
measures while neglecting others to improve compensa-
tion. They would be "teaching to the test," according to Dr.
Holmström's work.
These principles also play out in ACOs, where teamwork
can lead to free-riding. Under an ACO's framework, more
patients and physicians are needed to ensure quality met-
rics are precise, hence Medicare's minimum requirement
for ACOs to have 5,000 beneficiaries. However, this also
means individual physician behavior has less influence on
the group's overall quality performance, leading to the pos-
sibility of free-riding, or those who shirk responsibilities and
benefit from the efforts of others. Dr. Holmström suggests
employing an outside owner or deferring portions of com-
pensation can help mitigate this problem.
Dr. Hart's work can help inform physician-hospital con-
tracts. It focuses on incomplete contracts, or those that face
unforeseen challenges that could not be anticipated when
drawing up the agreement. Because future events are un-
known, Dr. Hart posits that contracts should instead outline
who has the right to make the decision if both entities do
not agree. When contracting is complex and many out-
comes are unforeseen and therefore cannot be measured
and benchmarked, Dr. Hart suggests using decision alloca-
tion rights instead.
He also provides theory to guide ownership decisions and
financial contracts. Dr. Hart suggests some contracts, par-
ticularly those that require entrepreneurship or innovation,
give the manager or entrepreneur the right to make deci-
sions for the business if performance is positive, but allow
investors to step in if performance lags.
The work of Drs. Hart and Holmström provides healthcare
organizations the tools to analyze the financial terms of con-
tracts as well as how control and decision rights are allocated
between physicians, hospitals and other stakeholders. n
