Paying Physicians for What Patients Actually Value

Every patient knows the social cue: the physician is standing, hand reaching for the doorknob, ready for the next visit. The patient didn’t choose the pace of the appointment. It was set by the organization’s compensation formula. "Nothing creates greater dissatisfaction than that rushed-visit feeling," says physician compensation expert Opal Greenway, senior client partner at Korn Ferry. “Patients would never design it.”  

Yet the rushed visit is a norm across health systems and practices, because physician compensation models are built around reimbursement numbers. The question is how to insert patient experience into the compensation model—without blunting productivity or breeding cynicism. Four moves can work:  

1. Reward What Patients Actually Value

The common assumption is that patients want longer visits. The research says otherwise. In a 2016 study of 440 recorded primary care visits in the U.K., consultation length had no measurable effect on patient experience. What matters to patients is whether visits meet their expectations, and whether their concerns and questions are addressed. And patients can be surprisingly brief: in a 2019 study, patients took a median of six seconds to state their concerns during appointments. Yet most compensation models reward the volume of visits, not whether patients’ actual needs are met.  

The right question is: Did the encounter match what this patient needed today? Take, for example, a teenager whose care is coordinated by an adolescent care nurse. The nurse might tell the family that she is going to spend as much time with the patient as his situation requires. "My family recently went through this, and the quality of that experience was so much greater than anything I've observed,” says Dan Stech, senior client partner at Korn Ferry. Meeting patient needs should become worthy of the same attention–and measurable outcomes–as productivity and financial performance.

2. Treat Continuity as Essential to Patient Experience

Patients do not like to lose a trusted doctor, and will often follow one who leaves. That makes physician retention a key part of any patient-experience strategy. "Health systems will lose patients when their doctors exit," says Li Ern Chen, M.D., M.S., market leader of Physician Workforce Solutions at Korn Ferry.

One underused tool for retention is deferred compensation with a vesting schedule. For example, one Midwestern hospital group puts doctors’ call-coverage bonuses into a tax-deferred vehicle; as a result, physicians remain in the on-call rotation longer. In turn, recruiting is easier, because candidates see more colleagues sharing the call load.  

"Physicians tend to be skeptical of anything that isn't cash,” says Ken Krall, senior principal at Korn Ferry. He notes that how the plan is set up and explained matters.  

3. Pay Physician Leaders and Physicians Like Executives

Most boards already pay executives for patient outcomes. "Access, outcomes, costs—it’s all built into the executives' incentive plans," says healthcare total rewards expert Alanna Conte, senior client partner at Korn Ferry. "If we offer it to the executives and management, why aren't we offering it to physicians?" The goal and targets are the same, from leaders to clinicians.

Some independent physician groups already do this, offering cascading incentive pools, often for groups of 200-plus physicians, divided by role, tenure, or set percentages. In health systems and academic settings, these incentives are rarely offered beyond formal leadership roles.  

Organizations can begin by offering incentives to physician leaders, whose priorities will trickle down to staff physicians. At one academic health system, Korn Ferry helped build a pay plan for department chairs that aligns with executive compensation.  

4. Make it Big Enough  

Incentives only work when they’re noticeable. Consider one large health system that recently halved its patient experience bonuses, down (from 2 and 5%) to 1% and 2.5%. For physicians, the bonuses now amounted to less than $5,000, expected every holiday season, with little understanding of why. "After taxes, that really doesn't mean anything to a physician," says Conte. "They might not even know what it's for."

Three rules for designing incentives:    

• Build them with physicians: Connect the incentive design to the behaviors that will be encouraged.  

• Size them to matter: A chunk of pay changes behavior; a sliver does not.  

• Show progress during the year: Physicians should know where they stand in real time.

The bottom line: When compensation plans reward what patients value, they feel it in every visit—and they keep coming back.

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