Nearly half of medical groups tie physician compensation to quality performance

The slow and steady embrace of value-based care across healthcare picked up some steam in the past year, as nearly half of all medical groups report having quality metrics tied to their physician compensation models. 

A May 16, 2023, MGMA Stat poll found 47% of medical groups tie quality performance metrics to physician compensation plans, versus only 53% that do not. This represents a 5-percentage-point jump from a similar poll conducted May 24, 2022. The latest poll had 487 applicable responses. 

These new figures mark another uptick in the use of quality metrics within physician compensation models after years of very slow growth prior to and during the COVID-19 pandemic: 

• Just more than one in four (26%) medical groups tied quality performance to physician compensation in 2016. 
• By July 2018, the share of groups with quality tied to compensation rose to 36%. 
• A March 2019 poll — the last such poll MGMA Stat conducted on this topic prior to the pandemic — found that nearly 4 in 10 (38%) of groups had tied quality performance to physician compensation. 

Among medical group leaders with quality metrics tied to physician compensation, the percentage of overall compensation tied to quality performance has hardly taken a step back as the industry has continued its recovery from the COVID-19 pandemic:  

• Only 3% of these respondents said they pulled back on how much quality performance counts in their compensation models the past two years. 
• The rest (97%) reported that the share tied to quality performance either stayed the same (61%) the past two years or increased (36%). 

Several healthcare leaders told MGMA that they were in the process of considering more elements of quality in their compensation models as they have restored productivity after tough years during the pandemic. “Now that we have stable volumes, we can focus more on quality performance,” one respondent told MGMA. Another respondent said that their group previously had quality performance tied to compensation before the pandemic but “took them out” of the physician compensation formula during the COVID-19 lockdowns. That group is now planning to bring back their quality performance component in the coming months. Other practice leaders said that as contracts renew, they are taking a fresh look at how they weight existing quality performance against elements such as productivity. 

The slow road back to normalcy… 

As retired MGMA senior fellow David N. Gans, MSHA, FACMPE, explored in recent Data Mine articles for MGMA Connection magazine, gains in productivity over the past two years show a medical workforce that, amid the challenges of the pandemic and staffing shortages, have found a way back to pre-COVID benchmarks: 

• In his July 2022 Data Mine, Gans’ analysis of the 2020 to 2022 MGMA DataDive Physician Compensation data sets found that medical compensation for physicians across seven specialties who practice in physician-owned and hospital-/health system-owned practices shared a common theme: Their compensation in 2021 had fully recovered from the impact of the pandemic and, in some cases, increased significantly. 
• That same analysis found that physicians in physician-owned practices had greater productivity than their counterparts in hospital-owned practices in six of those seven specialties, as measured by median work RVU (wRVU) production. [MGMA members can access the full graphs and tables of MGMA DataDive figures with their login information.] 
• In his October 2022 Data Mine, Gans examined MGMA DataDive benchmarks for the three-year pandemic experience, with 2019 as the base for pre-COVID operations. While 2021 saw major gains in median wRVUs per full-time-equivalent physician in most practices versus 2020, they were not as striking compared to pre-pandemic levels: Physician-owned multispecialty groups reported a 13.5% increase in wRVUs and a 3.2% decrease in total RVUs compared to 2019, while hospital/IDS-owned groups had a 7.4% increase in wRVUs and a 9.1% decrease in total RVUs over the two years.   

…interrupted by a labor crisis 

It’s common knowledge that staffing was the biggest challenge facing medical groups the past two years (as shown from MGMA Stat polling from late 2021 and late 2022). What has been more difficult to quantify is the frontline impacts on productivity and compensation. 

What we do know is: 

• A majority of medical groups report staffing (56%) is their biggest roadblock to higher productivity, per an April 18, 2023, MGMA Stat poll. 
• By November 2022, less than two-thirds of medical groups were on track with or exceeding their productivity goals for the year. 
• Two-thirds of medical groups added or improved patient self-service tools in 2022 amid the Great Resignation to take workload off strained healthcare teams. 
• Only 28% of medical groups added an ancillary service in the previous year, according to an October 2022 MGMA Stat poll, with many noting that hiring and recruitment difficulties held back their efforts in this area. 

One bright point amid this turmoil: An Aug. 2, 2022, MGMA Stat poll found that a majority of medical groups reported their patient no-show rates stayed the same (39%) or decreased (12%) since 2021, despite many of those who saw their rates worsen report that long wait times exacerbated by low staffing were a top driver of no-shows. 

Learn more: MGMA DataDive Provider Compensation 

Balance compensation with productivity with the most reliable data in the industry. MGMA DataDive Provider Compensation is your go-to resource for any physician or advanced practice provider (APP) compensation decisions. Use it to understand the unique differences among physician-owned, academic and hospital-owned practice benchmarks across multiple regions, practice sizes and provider experience levels. Benchmarks include: 

• Compensation (including total pay, bonus/incentives, retirement) 
• Productivity (work RVUs, total RVUs, professional collections and charges) 
• Benefit metrics (hours worked per week/year and weeks of vacation). 

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