Understanding Physician Compensation Structures and Its Effect on Practice - Essay Sample

Introduction

With the rising cost of healthcare, governments and private employers are developing innovative ways of providing quality services with limited facilities. Doctors play a significant role in the sector, and the compensation methods influence their motivation (Rudmik, Wranik & Rudisill-Michaelsen, 2014). Therefore, physicians should understand the compensation structures and the effect they have on their practice. Some physicians have opted to work as private practitioners while others prefer to work in government facilities depending on the compensation methods. The compensation methods the essay evaluates are; fee-for-service, salary, and capitation.

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Doctors' Compensation Methods

Doctors get compensated based on different methods. Fee-for-service is the compensation method where doctors' income is directly related to the number of services they offer. For example, they get paid depending on the number of patients they have treated each day. The technique is crucial because it is an incentive for doctors to increase the number of services to the patients (Rudmik et al. 2014). The motivation of the method is that the financial stability of the doctors depends on their ability to serve many clients. As a result, they must offer quality services so that they retain their patients. Similarly, the method creates a platform for doctors to accept high-cost or low-cost patients making the technique different from the salary method (Lochner, Trowbridge, Kamnetz & Pandhi, 2016). However, it may lead to accepting high-cost patients since they want to make money and low-income patients may not access equality services; hence they will be disadvantaged.

This method implies that it reduces the likelihood of doctors accepting low-risk patients and they will focus on top cream patients. However, it satisfies the doctors and the patients due to the quality of service they provide to have return clients. With this method, there will be low employee turnover since their income depends on the quality of services they offer, and the number of patients they serve (Rudmik et al. 2014). Therefore, professionals should enhance their performance to improve their income. However, some managers argue that the technique is not valid since it does not promote equality in healthcare since they select high-risk patients limiting the accessibility of services by low-risk patients.

Capitation is the second method of paying employees. With this method, medical doctors get payment based on patients served per time. It aims to motivate medical practitioners to increase the number of patients they serve per time, and this points to expanding healthcare services provided. It implies that medical practitioners will select relatively sick clients and avoid less healthy patients (Rudmik et al. 2014). However, a study done in Norway demonstrates that capitation increases referrals to private clinics where the patients can get a detailed examination. The referring physician could have provided the same services, but because they want to spend little time seeing patients.

The implication of this technique is that it will select relatively healthy patients while referring patients with complications since their pay depends on the number of patients served within a timeline. It manages physicians' turnover since the method empowers them to refer less-patients patients to private clinics where they pay a fee for services rendered (Rudmik et al. 2014). In this regard, the technique may affect the performance of the medical practitioners since they concentrate on relatively healthy patients. On the contrary, capitation may reduce the quantity of health care services provided which ultimately reduce health expenditure due to increased referrals, but it also reduces the quality of services.

Thirdly, there is salary method. It involves compensating doctors a fixed payment, and it is also called the remuneration model. The fee does not depend on healthcare services provided or the number of clients served. At the end of the period, like one month, they get a fixed income (Rudmik et al. 2014). It implies that physicians will predict the income they will get at the end of a period, and they can plan effectively. Besides being an incentive to deliver quality care services, it helps to retain the professionals since they are happy with the income. However, they can seek employment in other organizations if they are not satisfied with the rates.

It satisfies the professionals since they are not under pressure to increase the number of working hours nor the number of patients served. Instead, they will focus on quality healthcare, and they take their time on one patient before moving to the next (Rudmik et al. 2014). Since the payment is not related to time or quantity of services, they will not select moderately healthy patients suggesting that they will not discriminate any patients. In this regard, the method improves the performance of the doctors since they know that their role is to get paid for the quality services they provide. Fundamentally, the payment method depends on the arrangement between the employer and the employees.

Conclusion

Doctors starting their medical practice should understand compensation methods available and their implications. This understanding helps to know the structure and compensation dynamics. The three most common compensation frameworks are fee-for-service, capitation and salary. The methods have different implications; hence the doctors should understand while the employers have the responsibility of complying with employment law and professional standards.

References

Lochner, J. Trowbridge, E. Kamnetz, S & Pandhi, N. (2016). Family physician clinical compensation in an academic environment: moving away from the relative value unit. Family Medicine 48(6), 459-466.

Rudmik, L. Wranik, D & Rudisill-Michaelsen, C. (2014). Physician payment methods: a focus on quality and cost control. Journal of Otolaryngology head & neck surgery (2014), 43: 34.