Doctors' pay plan is cutting edge

  • Article by: MAURA LERNER , Star Tribune
  • Updated: September 14, 2011 - 7:50 AM

Fairview formula pays to keep patients happy, healthy.

Throughout history, most doctors have earned money by seeing patients -- simple as that.

But at Fairview clinics in Minnesota, history is about to change.

Fairview has created one of the most unconventional pay schemes in the world of medicine. For the first time, it's paying doctors to keep patients happy, healthy and out of the hospital.

In April, Fairview introduced a new pay formula for hundreds of doctors at its primary care clinics. Under the new plan, fully half of physicians' income will depend on external ratings, including patient satisfaction surveys and quality-of-care scores.

By one estimate, only about 20 percent of a doctor's pay will depend on actual face-to-face encounters with patients. But for the first time, they will get credit for communicating with patients by e-mail, phone, video conference and other alternatives.

"It's a very big mindset shift for physicians," says Dr. Greg Schoen, the director of physician compensation at Fairview.

It's also drawing national attention.

It "is pretty cutting edge," said Harold Miller, head of the Center for Healthcare Quality and Payment Reform, a think tank in Pittsburgh. The whole industry is talking about the need to transform doctor pay, he said. But unlike Fairview, few have made any dramatic changes. "They're clearly among the first."

Schoen admits that the new pay structure is a "drastic change." But he and other Fairview officials say the traditional system -- which basically gives doctors a financial incentive to run more tests and do more procedures -- is doomed in an era of health reform.

"We stopped paying them by counting what they did," said Dr. Dave Moen, president of Fairview Physician Associates, who helped oversee the change. "What we're doing is really a microcosm of what needs to be done across the country."

The new pay formula has admittedly caused some grumbling in the ranks.

"Any major change, especially when you're talking about compensation, makes people nervous," said Dr. Jason Nowak, an internist at the Fairview Eagan clinic who helped draft the plan.

But he said it's designed, in part, to free doctors from what many call the tyranny of the office visit. Before, physicians got paid only for face-to-face encounters. Now it's all about team care and patient outcomes.

In Minnesota, other medical groups say they too may be tinkering with doctor pay, and are eagerly watching the experience at Fairview, one of the state's largest clinic networks.

"I don't think this is radical," said Dr. Brian Rank, medical director of HealthPartners Medical Group. "Doctors have said for a long time that the current payment system is broken. But we don't exactly know what the perfect one is going to be in the next world."

Reform pressures

At Fairview, it was the doctors themselves, according to officials, who first came up with the new pay formula.

They could read the writing on the wall, said Moen. Fairview, like all medical systems, is under pressure to rein in costs. Medicare and the big private health insurers are pushing the latest trend, "accountable care organizations," to give groups like Fairview new incentives to cut the overall cost of care. And penalize them if they don't.

Yet Fairview's doctors, he said, were still being paid on a fee-for-service system, which encouraged them to do as much as possible.

That was not sustainable, Moen said, and everyone knew it. They came up with a formula to shift the pressure on doctors from "production" (seeing patients) to "outcomes." From now on, a large part of physicians' income would depend on their ability to help patients control chronic diseases, like heart disease, and stay out of the hospital. (The rules apply only to primary care doctors, not specialists.) Patient satisfaction will count toward 10 percent of pay, and quality-of-care scores for such common conditions as asthma, diabetes and depression will count for 40 percent.

By its own calculations, about 25 percent of Fairview physicians would have faced a pay cut under the new plan, according to Schoen.

To soften the impact, Fairview told doctors that no one would lose any money, at least this year. At some point, though, officials say the old system will disappear.

Work in progress

It wasn't long before the new plan hit some speed bumps. Some doctors complained that the formula was complex and confusing.

Rumors swirled that family physicians were threatening to stop delivering babies if the formula wasn't changed. Fairview officials will say only that some concerns were raised, and have been addressed.

"It's a work in progress," said Moen. "There's grumbling all over, but it's healthy grumbling in my view. ...What we're trying to do is be responsive and understanding."

Some outsiders, though, are skeptical. "The doctors are sort of pawns in this game," said Dr. Lee Beecher, a St. Louis Park psychiatrist who is not affiliated with Fairview. How, he asks, can physicians be sure if their pay is fair or accurate?

"If you're going to tell a doctor that they're going to be paid on quality that somebody else is going to rate, that's going to go over like a lead balloon," Beecher said.

So far, however, Fairview says there's been positive feedback as well, and that quality scores at the clinics are rising. In fact, Fairview says pay has gone up for family physicians, as a group, since the new formula was introduced.

"People want to think that it's all about pay," said Moen. "The reality is, this is affecting the way care is delivered."

Moen readily agrees that there may be more changes to come as Fairview assesses the new approach. "There are going to be difficult conversations, but we can no longer avoid that," he said. "We've decided staying the same is riskier than changing."

Maura Lerner • 612-673-7384

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