Primary care physician incentives in medical group practices

Context: Although medical groups are adapting to changes in financing healt h care, little is known about individual physician incentives in this envir onment. Objectives: To describe methods group practices use to compensate primary c are physicians in a managed care environment and to examine the association of revenue sources for the group practice from all patients and primary ca re physician incentives. Design: We surveyed by mail group practice administrators for practices tha t had at least 200 members continuously enrolled in 1995. Setting: Group practices that had contractual arrangements with Blue Cross/ Blue Shield of Minnesota. Participants: One hundred of 129 group practices returned usable surveys. Results: Most groups had some portion of primary care physicians' compensat ion at risk, although 17 groups compensated them through fully guaranteed a nnual salary. Seventy-one groups used productivity, 4 groups used quality o f care, 1 group used utilization, and 30 used group financial performance. Factors reported to significantly influence primary care physician compensa tion included billings or charges, overall group practice performance, and net revenue or profit. Groups that had a higher proportion of income from v arious types of fee-for-service arrangements used lower proportions of base salary for primary care physician compensation and were more likely to rel ate physician income to measures of productivity. Conclusions: Substantial variation exists in the types of primary care phys ician incentives implemented by medical groups. Base salary, individual pro ductivity, and group financial performance were most frequently used to det ermine compensation. Physician personal financial risk was higher overall i n group practices that derived more revenue from fee-for-service contracts.