Physician pay is changing

An independent commission has issued a set of proposals aimed at changing the way physicians are paid in the United States, including a call to largely phase out fee-for-service pay within five years.

The National Commission on Physician Payment Reform, launched under the auspices of the Society of General Internal Medicine (SGIM), spent the past year devising a set of 12 recommendations guided by six basic principles, all with the goals of shifting the physician payment system toward decreasing total expenditure while improving quality of care.1

“We’re now at a point where the level of spending on healthcare is unsustainable, and the way that doctors are paid is one of the single most important drivers of our escalating healthcare costs,” Steven A Schroeder, commission chair and professor of health and healthcare at University of California, San Francisco, said at a Capitol Hill briefing announcing the report.

Indeed, despite the enormous outlay for healthcare in the United States—totaling 18% of gross domestic product and $8000 (£5000; €6000) per capita per year, an amount greater than any other country spends—the US ranks just 37th in health status, behind nations such as Oman, Morocco, and Paraguay.

The Medicare program alone consumed 15% of the federal budget in 2010, up from 3.5% in 1975. By 2020, that proportion is projected to reach 17%, or 4% of gross domestic product.

In an interview with the BMJ, Schroeder said the main problem was not physicians’ salaries per se, which account for about 20% of total healthcare spending. Rather, it was the results of their decisions, fueled by a fee-for-service payment system that rewarded action rather than outcome, which consume 70%.

“Fee-for-service promotes fragmented care and encourages doctors to …