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How to Achieve Physician Practice Integration

Philip Betbeze, for HealthLeaders Media, July 15, 2011

Recently, I was talking to the vice president of medical affairs at a major Midwest hospital system, and the conversation turned to physician employment. A physician himself, he reflected on the shift we've seen over the past dozen or so years on the subject of physician employment.

About a decade ago, hospitals were busily divesting themselves of hastily-acquired physician practices that weren't panning out as the hospitals had planned. What they found was that they were the (sometimes willing) victims of a bubble in physician practice valuation. Not only that, but they found that once they had acquired the practices, they had neither the expertise nor the systems to run them efficiently or to ensure the productivity of physicians who had become employees. 


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They couldn't get rid of these practices fast enough.
 
Anyway, he chuckled a little when he described the shift, and I'm not identifying him because he asked that the following be considered off the record.

"A big part of our future is in alignment and integration," he said. "Now, cardiologists, for one example, are knocking on our door and practically begging for employment. That allows us to be innovative in employing right groups who are really interested in working with systems and being measured for quality and productivity."

Yes, hospitals are once again interested in acquiring physician practices, mainly because it offers them a way to ensure accountability, quality, and productivity in an era where excellent performance on those measures is financially rewarded. And this desire for employment stretches far beyond cardiology. But the work is really in the integration, not the art of the deal.

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1 comments on "How to Achieve Physician Practice Integration"


A. J. Rosmarin (8/12/2011 at 9:29 AM)
As a subject matter expert in physician practice management advisory services, I can state that there arer five prime reasons to consider integration. Unless a practice can realize a net gain in at least two of them, the probability of a successful and mutually-rewarding transaction is low. The five key components are: 1) Infrastructure economies of scale (documented cost-savings) 2) increase in managed care contract reimbursement 3) Group purchasing advantages 4) Malpractice premium reductions 5) Complementary services Emotional integration for the sake of "just doing something" is never a good reason to act. With one-third of practicing physicians aged 55 and over, this is a subject of increasing frequency.