February 22, 2017

Should your CEO's paycheck depend on population health outcomes?

Daily Briefing

    A small but growing number of hospitals and health systems are tying executive compensation to population health measures, but making such models work requires having a comprehensive view of patient health—and knowing what metrics matter, Shelby Livingston reports for Modern Healthcare.

    Value-based payment models are pushing health care providers to embrace population health, which emphasizes long-term health outcomes, social determinants of health, health care disparities, and preventive care, among other factors, Livingston writes.

    In keeping with that trend, some hospitals and health systems are now using population health metrics to determine executive compensation. And despite the recent change in the political climate, experts expect the shift to value-based care—and population health-based compensation—will continue, according to David Nash, head of the Jefferson College of Population Health.

    How it works

    Overall, between 20 and 35 percent of large health systems say they link c-suite incentives to measures of population health, Livingston writes.

    For instance, Trinity Health's board sets performance targets annually for the 93-hospital health system and weighs each area to set incentive pay for executives' pay. The categories are:

    • Hospital-acquired infections (HACs) and readmissions (20 percent);
    • Smoking and pediatric obesity rates (20 percent);
    • Patient satisfaction (20 percent);
    • Workforce engagement (20 percent); and
    • Financial performance (20 percent).

    Trinity CEO Richard Gilfillan said the emphasis on clinical and population health-related measures is a core part of the system's overall strategy. "It's important to make sure you align incentives with desired outcomes," he explained.

    Trinity is one among only a "small but growing minority of health systems linking executive pay to population health measures," Livingston writes.

    How to establish defined population health goals

    Henry Ford Health System sets executive compensation with some of the same metrics as Trinity, such as HACs, but also uses other metrics, such as the development of a patient portal.

    Meanwhile, Mercy Health executives' compensation is determined in part by:

    • The system's performance in Medicare's bundled payment programs for joint replacements;
    • How easy it is for patients to see a primary care physician;
    • Curbing avoidable readmission rates;
    • Lowering the opioid misuse rate by screening and referring patients to rehab centers; and
    • Boosting population health via preventive care, such as breast cancer and diabetes screenings.

    Mercy Health also factors in certain revenue targets and investments in programs aimed at benefiting the local community.

    Challenges

    However, experts say it's difficult to use such compensation models if a hospital or health system doesn't have good visibility into important clinical metrics across the continuum of care. Nash explained, "You can't do population health without the data—that's clear."

    Philanthropy: Your untapped resource for financing population health

    For instance, Trinity built an entirely new reporting system to enable population health-based executive compensation. "This is a pretty large enterprise activity," Gilfillan said. "You want to make sure you build an infrastructure that gives accurate results and provides information to folks so they know how well they are doing, and let them make adjustments."

    Further, hospitals and health systems need to have a clear understanding of their goals when it comes to population health. Anton Decker, Mercy Health's chief clinical officer and president of Mercy Health Physicians, said, "A lot of organizations struggle because they haven't identified what's important." According to Livingston, Mercy Health officials spent several months selecting which incentives to focus on, and 2017 is the first year that the finalized set will be used (Livingston, Modern Healthcare, 2/11). 

    Learn six ways to 'Washington-proof' your population health strategies

    On March 14 at 11:00 a.m. ET, join clinical alignment expert Austin Weaver as he presents six "Washington-proof" population health strategies. Learn about the biggest trends to watch for in 2017, how MACRA will influence your population health decision making, and what you can do to anticipate challenges that lie ahead in the coming year.

    Register now

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