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Physician Payment: Forget Carrots And Sticks, It’s Motivation

August 7th, 2013

Motivation is the fuel that keeps any professional going, the fuel for our internal generator. Where we go, of course, depends on our morals and ethics, but that’s a different issue. Our motivation is to achieve certain goals, and overwhelmingly, health care professionals’ goals are to care for their patients and achieve a measure of peer recognition. Ideally, if health care professionals fully realized that motivation, we’d have really good care that is affordable.  But that’s not the case.

So what has gone wrong? Realizing that professionals should be paid for the services rendered, we designed a payment system that inadvertently created a negative charge on the generator. And slowly but surely, motivation was sapped. Amazingly, and to their credit, clinicians continue to try and do right for their patients; it shows how strong their motivation really is, and what a powerful force it could be if it weren’t continually sapped.

The failed carrots and sticks of fee for service and capitation. Fee for service, which seemed a reasonable enough approach, has become an external charge on the health care professional’s generator. A very powerful charge. Health systems, vendors, pretty much the entire medical-industrial complex has evolved around that charge, like a nicotine-addicted Rhesus monkey or a junky on the streets of SoHo. Jobs turned to production lines, ginning out RVUs. Organizations optimized for patient churn. Discounts for volume just made it all worse.

The result is clear. We have unwarranted variation in price and quality, dissatisfaction of the workforce, unnecessary harm to patients, and unaffordable health care for millions of Americans. So much for the carrots.

Realizing that volume-based payments weren’t ideal, the private sector capitated physician groups and health systems, and replaced one charge with another, a stick for a carrot. The results were predictable, and painful. Especially, one might say, since there were now two conflicting charges that were tugging at health care professionals: roduce more volume for Medicare beneficiaries and less volume for commercially insured. So much for the stick.

A new way forward. In a new Robert Wood Johnson Foundation report, I suggest a different approach. The first step is to determine whether any given payment model has the potential to sap the healthcare professional’s motivation to adhere to scientific evidence, to be the prudent steward of the patient’s care, and to help the patient through the healing process. If it has the potential to create a negative charge on motivation, then change it, make improvements.

Keep experimenting and modifying with various approaches for various professionals and their organizations. After all, let’s remember that the private sector has been working on employee compensation for decades and continues to balance the incentives so that they don’t get in the way of motivation.

All professionals need to be paid for their work, and money is the mechanism to do that in all but a barter economy. However, payment reform must avoid one key pitfall if it has any chance to succeed: We must not try to replace motivation with an artificial charge. This will be challenging for many in the industry. Hospitals and health systems still use RVUs as the primary form of calculating total compensation, much like private sector companies put salespeople on commission. That must change. Health plans and Medicare continue to overwhelmingly use fee for service, much like farmers get paid by the bushel or the cattle head. And that must change.

Emerging models offer glimpses of that change. Health care organizations accepting some balanced risk in ACO-like financial arrangements are modifying internal compensation systems and linking clinician pay to clinical results and prudent use of resources. Hospitals and physicians paid for episodes of medical care in bundled fee programs are focusing on supply chain management and downstream patient management. These are encouraging signs that reducing the toxicity of the negative charge can free up clinician motivation.

As this shift continues, we must find better ways to spread the results of these payment and compensation experiments so that we adopt best practices and learn from failures far more quickly than we do now. That is why my organization, HCI3, and others will be working together to create learning communities to improve incentives in health care.

In a 1968 Harvard Business Review piece, Frederick Herzberg had this wonderful insight that external incentives are charges that have to be continually recharged to work, and ultimately, like all batteries, they fail. And that it’s only when one has an internal generator — motivation — that goals are realized. It might be time to apply that insight to health care. After all, everything else seems to have failed.

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1 Response to “Physician Payment: Forget Carrots And Sticks, It’s Motivation”

  1. DikeDrummond Says:

    If you are looking for internal motivation … rather than messing around with what we presume to be a powerful external motivator – money – we have to start discussing how to keep physicians connected with a sense of purpose in what they do. The loss of this sense of purpose is one of the three cardinal symptoms of burnout as measured by the Maslach Burnout Inventory. Christina Maslach called it “lack of efficacy”.

    In today’s typical healthcare workplace there are so many hassle factors and stressors that get in the way of a meaningful connection with the patient, it is no wonder burnout rates average 1 in 3 worldwide regardless of specialty. Money won’t make that better. Culture is the mainline connection between a physician and their purpose in medicine.

    As long as docs are paid “enough” … it is culture that makes the difference in their burnout rates and their motivation to continue to practice. The bottom line is patient centered care starts with a happy healthy doctor in a physician friendly workplace. The doctor comes first – not the compensation formula. They can’t give what they aint got.

    The organizations who realize this and nurture a more physician friendly workplace … will see the docs more connected to their purpose, higher quality care and higher levels of satisfaction. Culture trumps compensation formula IMHO.

    My two cents,

    Dike Drummond MD
    TheHappyMD (dot) com

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