Context: Although medical groups are adapting to changes in financing healt
h care, little is known about individual physician incentives in this envir
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.