Hospitals lure physicians from private practice
According to a 2009 report by the American Medical Association, one in six doctors works for a hospital, and the number is quickly growing.
In 2009, half of new physicians were hired by hospitals, according to the Medical Group Management Association. Several factors are driving the trend.
For some doctors, the recession is making it more difficult to run a small business, with fewer patients coming in for care and others unable to pay their bills. And many physicians who are just starting out don’t want the long hours and administrative headaches that come with private practice.
For Rex Healthcare in Raleigh, N.C., and many other hospitals, hiring physicians is crucial to their strategies. Hospital executives say more employed physicians bolster care through better coordination of services. They also emphasize the impact of the new healthcare reform law: it rewards creation of more efficient, integrated models of care.
Some experts worry, however, that hiring doctors and forming the accountable care organizations envisioned under the law could give hospitals much more negotiating clout with health insurers – and drive up insurance prices paid by employers and consumers.
Steve Burriss, senior vice president in charge of physician employment at Rex, has hired about 30 physicians over the past few years and is in talks with another 55. Raleigh is a highly competitive market and each of the major systems wants to grow and attract patients with private insurance, which typically pay more than Medicare and Medicaid.
Burriss estimates there are only about 67 practices left in the Raleigh area that are not yet affiliated with a hospital. In the next five years, he said, the vast majority will be scooped up by local hospital systems.
Michele Roberts Casey, MD, a primary care physician, made the leap from private practice to WakeMed Health & Hospitals in April. The Raleigh-based system offered her a competitive salary, a bonus based on how many patients she saw, and a promise to handle all of the administrative services for the practice.
"We spend so many hours doing administrative work in the (private practice) world, it's very frustrating," said Casey. "We don't have that here. We can focus on patients, we can take good care of our patients and they can remain our priority."
This isn't the first time hospitals have gone doctor shopping. In the 1990s, they went on a buying frenzy. William Jessee, MD, president and CEO of the MGMA, remembers the experiment as something of a disaster.
Because hospitals often put physicians on flat salaries without the financial incentive to see more patients, they "weren't working as hard as they were before their practice was acquired,” he said.
Hospitals lost a lot of money and ended up divesting most of the practices. This time, hospitals are providing incentives such as bonuses based on how many patients they see.
WakeMed hopes that sooner or later, patients will notice an improvement in their care. The hospital currently employs about 138 doctors and plans to hire another 60 over the next six months. In 2000, WakeMed employed just 47.
Paul Ginsburg, president of the nonprofit Center for Studying Health System Change in Washington, D.C., said insurers and their customers could get stuck with higher prices for doctors’ care, because hospitals that employ doctors generally have more negotiating clout with insurers than doctors working in private practice.
The price difference can be so big, Ginsburg says, that hospitals can pay the doctors more and “still have something left over” for themselves.
But, Ginsburg says, if doctors and hospitals can work together to avoid repeat tests and unnecessary procedures, it could both improve the quality of care and even save money.
This article was reprinted from Kaiser Health News, an editorially independent news service and a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.
