The Link Between Physician Burnout and Provider Business Models

In response to Atul Gawande’s article on the linkage between EMRs and Physician burnout, I wanted to address a key driver that is not mentioned in the passage: the impacts of business models. The below is an email that I penned to a group of friends.

Atul Gawande’s New Yorker Article:

TL;DR: Levels of physician burnout are most impacted by the business model in which a provider operates. Technology has certainly contributed to it, but that is because the tech was built for the goals of the business model. The most important thing we can do to address this problem is convert as much of the industry as possible to reward value over volume.

The drivers of physician burnout are certainly plentiful, but I wanted to clearly demonstrate how biz models contribute to this problem. Some of this is basic stuff I assume you know, but writing it out anyway:

Fee for Service (FFS) Business Models

In FFS, practices and hospitals are run by executives whose job is to maximize the profit generated by the facilities, equipment, and physicians.  These types of organizations impose the greatest cost burden on the healthcare system at large due to the combination of federally accepted facility fees, market power driven negotiations with payers, and consumer shielding from actual prices through insurance. FFS will ALMOST ALWAYS generate greater profits for provider organizations compared to VBC, making it nearly impossible to make the shift to VBC within these incumbents.

Physicians are paid either by receiving a percentage of the fees for a particular procedure or by salary. However, even in the salary scenario, physician compensation is based on Relative Value Units (RVUs) that are tied directly to service volume in many ways. Because of this business model, physicians are paid based on their ability maximize volume of patients and procedures. As private practice becomes more rare, the organizations that employ these physicians will continue to push their staff to achieve new volume-based metrics while also working to reduce the % of the pie they receive in compensation. Physicians who cannot achieve greater volume will perceive it as a pay decrease while physicians who do increase volume will still realize they are making less money than they would have previously. 

Another nuance in this scenario is the difference in reimbursement for specialists over Primary Care Physicians (PCPs). Because specialist rates are often orders of magnitude higher than PCP rates, increased volume impacts their individual bottom lines in different ways. PCPs need to see even more patients per week in order to achieve similar pay increases as specialists. In the world of VBC, PCPs are the most valuable members of a care team that can help to treat the whole patient rather than a single condition.

Because of these factors, we see the following impacts:

  • Specialist Pay / Burnout: Astronomical increases; burnout attributed more to desire to maximize salaries

  • PCP Pay / Burnout: Minimal / Moderate pay increases; burnout is a significant problem b/c of the sheer number of patients a PCP needs to see in a given period of time to make a decent salary

  • Technology: Technology will be built for the buyer - the health system seeking to earn greater profits. It will not be built for the ease of use of the physician and will certainly contribute to the burnout issue. Maximizing billing is often diametrically opposed to simplifying ease of use of tech.

Value Based Care (VBC) Business Model

In this business model, provider organizations take on the risk for the costs of their patients through either contracting with a plan or establishing one themselves. In this way, maximizing profits - while still moderately based on patient volume - is also based on proper management of the health and wellness of a population. There are a lot of ways to do this that I will not go into in detail in this note. 

In VBC, Physicians are almost unanimously compensated on a salary. While some may still utilize RVUs mentioned above, they are also paid based on their ability to hit risk adjusted, outcomes-based quality measures. Physicians have historically lobbied hard against including this form of compensation in their pay packages, and they continue to fight them in FFS business models. As FFS continues to push volume, the rates of physician errors will go up - undoubtedly impacting their ability to hit the outcome metrics specified for them. 

This change in compensation model leads to physicians seeking the treatment (or lack of treatment) that will have the greatest impact on the overall health of the patient - rather than trying to maximize the number of patients they see. If patients switch plans frequently, it may also lead to reductions in service utilization because the VBC plans wouldn't be able to capture some of the value they create through implementation of preventative care. While we are still working to optimize how to leverage the intersection of technology and care delivery to address patient health, physicians will likely be paid less than working in a FFS ecosystem initially. However, as tech becomes more impactful, we will see physicians who are able to care for many more patients adequately without the need for a full schedule of visits. Physicians will spend a lot more time evaluating data and a lot less time in their office. When patients do come into the office (or via telehealth), physicians will have more time to spend with them face to face.

Because of these factors, we will see the following impacts:

  • Specialist Pay / Burnout: Specialists pay will decrease as fewer patients are sent to them for high cost procedures or because they are now compensated on a salary by the VBC provider; Burnout in this case should decrease significantly

  • PCP Pay / Burnout: PCPs are key to the success of VBC - and their pay will undoubtedly increase. Their workloads will also change to be more focused on care management (in partnership with physician extenders); Burnout in this case should also decrease significantly given the limited focus on volume

  • Technology: There is a reason that many new VBC players have built their own EMR systems (or wrappers around existing platforms); when billing is decoupled from patient care - we end up with systems built for the needs of the caregivers that are designed to maximize quality of patient care. Tech contribution to burnout will be a non-factor.