Question: Mapleton Family Medicine is a physician group practice located in a small city (population 150,000) in the Midwest. Mapleton is an eight-physician practice, consisting of family physicians, internists, and pediatricians. The practice is owned by two of the physicians; the other six physicians are currently salaried. The owners are concerned with productivity and quality in the practice. There is a relatively long waiting time for appointments, and a recent chart review revealed that the percentage of children who are up-to-date with immunizations has dropped. Also, anecdotal evidence suggests that at-risk persons are not routinely receiving flu and pneumonia vaccinations. Many patients have complained about having to wait up to 90 minutes in the waiting room. At this time, however, the practice is not in a position to hire another physician.

Each physician in the practice currently sees an average of 25 patients per day. The owners want this number increased to 30 patients per day without sacrificing quality of care. To reach this goal, they are thinking of moving to an incentive system, whereby physicians have a base salary equivalent to 75 percent of their current salary and have the opportunity to earn up to 125 percent of their base salary if they meet defined volume and quality goals. While the owners have not completely thought this system through, they want to set 30 patients per day as a base and, through the incentive system, encourage physicians to see, on average, up to 35 patients per day. In terms of quality, the owners have considered three measures:

1. Patient satisfaction surveys

2. Child-immunization audit data

3. Patient waiting times

Quality goals will be set biannually for each physician. The expectation is that physicians who achieve these goals will earn their full salary (assuming volume is adequate), and quality measures above their goals will result in bonuses according to a pay schedule.

Case Questions

1. You have been brought in to advise the owners on their proposed compensation plan, what advice will you give them before they proceed?

2. Do you see any potential negative consequences of this plan based on the information provided? If so, how will you address these concerns?

3. How do you think the physicians in the practice will react to this plan? Should they be involved in developing the plan, and if so, how should they be involved?