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Increasing pay for primary care doctors, why it matters

Posted Feb 08 2012 2:43pm

Wednesday, February 8th, 2012

By Mike Stephens
Former CEO,  Hoag Memorial Hospital Presbyterian

The current shortage of primary care physicians has received a great deal of attention in recent years, but very little has happened to impact or reverse the trend and the problem just continues to get worse.

The reasons for the shortage are familiar. In a 2011 survey by the Medical Group Management Association, the median compensation for primary care physicians was about $202,000.  This is about half or less of what surgical specialists or even internal medicine subspecialists earn. 

Rather than choosing to become general internists, residents are selecting more lucrative medical subspecialties or positions as hospitalists. Other well established general internists have started concierge practices, reducing significantly the number of patients in the practice.

An article in the Wall Street Journal focused on the plans of two major health insurers to increase payments to primary care physicians hoping it will result in significant reductions in medical expenditures in the future. The insurers point out that primary care spending represents about 6 to 8 percent of medical claims processed each year. By encouraging primary care physicians to become more involved in treatment plans and to manage chronic diseases more effectively, health insurers hope significant savings will result from reductions in specialty physician referrals and hospitalization.

WellPoint will offer primary care physicians a fee increase of around 10 percent, with the possibility of additional payments that could boost what they are paid for treating patients.

Aetna plans to start paying primary care physicians across its network an extra fee of $2 to $3 per patient per month if their practices are certified as meeting certain standards for providing access to patients and coordinating their care.

One big question is whether higher payments from insurance companies are significant enough to change the way physicians work. However if other health insurers embrace this payment change it could have a significant impact. One primary care medical group whose practice is part of a pilot project involving WellPoint and six other health insurers reports it earned an additional $100,000 from insurers over the past year as part of the pilot program.

While these private health insurance initiatives are still in their infancy, they may provide earlier results than the more complex, regulated accountable care organizations. Whether the increased payments will be substantial enough to encourage more physicians to choose primary care remains to be seen. But at least there is now a starting point for change.

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