Developing Progressive Academic Physician Compensation Plans for an Emerging ‘Curve 2’ Healthcare Market

American Health Lawyers Association Member Briefing co-authored by Navigant expert, Ron Vance.

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Organizations with employed and affiliated physician faculty members have accelerated the refinement of their physician faculty compensation plans to prepare themselves to bridge between the current “Curve 1” world (where providers are primarily paid based on fee-for-service reimbursements) to a “Curve 2” world (where providers are primarily paid based upon outcomes and/or reduced costs).  As Academic Medical Centers (AMCs) also expand their faculty plans to include geographically dispersed and predominantly clinically focused physicians, they are also utilizing modified “bridge” plan designs with a mixture of base, production and other “Curve 2” performance incentives.  As the transition to the “Curve 2” world progresses, many AMCs are feeling enhanced urgency to design and implement more progressive physician faculty compensation plans.

This Member Briefing, entitled “Developing Progressive Academic Physician Compensation Plans for an Emerging ‘Curve 2’ Healthcare Market.” (1) provides an overview of pertinent market trends & key drivers for revised faculty relationships; (2) discusses the implications of these trends and drivers for faculty compensation goals and design components; (3) identifies the key considerations in developing progressive physician compensation plan designs; (4) sets forth a recent Market Example Plan to illustrate a hybrid “bridge design” that is aiding one large AMC and faculty plan to accomplish its goals; (5) provides an overview of the legal, regulatory and valuation considerations relevant to plan design; and (6) concludes with additional considerations for the development of progressive faculty compensation plans.

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