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How Physician Employment Affects Hospitals, Patients

Karen Minich-Pourshadi, for HealthLeaders Media, December 2, 2011

This article appears in the November 2011 issue of HealthLeaders magazine.

With a struggling economy and imminent Medicare and Medicaid reimbursement cuts, physician practices nationwide are embracing employment at the hospitals and health systems they once eschewed. Doctors are being warmly welcomed by healthcare organizations eager to augment market share and leverage large numbers of employed physicians for payer rate negotiations. With growing numbers of physicians joining hospitals and health systems, how does the shift from independence affect the physician, the hospital, and the patient?

In the September 2011 HealthLeaders Media Intelligence Report Physician Alignment: The Collaborative Care Disconnect, 67% of survey respondents said they had received an increase in requests for employment from physicians. In the same report, 70% of healthcare leaders responded that they were planning to employ a greater percentage of physicians in the next 12 to 36 months, and they have been doing so. 

Though employing physicians is often heralded as a smart path for hospital and healthcare system growth, does it mean the end of the independent physician? Moreover, what can having a large number of employed physicians mean for patient care and reimbursement rates?

“I don’t know if it will be the complete demise of the independent physician, but I think the economic environment and regulatory one is driving physicians to look for something else other than independent practice,” says Mark Nantz, CEO at Bon Secours St. Francis Health System in Greenville, SC, which is part of the Marriottsville, MD–based Bon Secours Health System, a $2.9 billion Catholic nonprofit that owns, manages, or joint ventures with 18 acute care hospitals in seven states, and owns many other types of healthcare facilities. Bon Secours St. Francis currently employs 225 of the 650 physicians who work on site.

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6 comments on "How Physician Employment Affects Hospitals, Patients"


DonS (12/8/2011 at 1:22 PM)
A complex issue and while some points are valid I would contend that care integration can be achieved without MD employment. The short term effect is to increase costs for patients as ancillary services previously billed by the MD on a CMS 1500 are now billed by the hospital on a UB92. The reimbursement difference is staggering. And consolidation of the providers wont keep down costs - if what I have heard about Sutter Health in CA is true. Lastly, if employed docs keep all the care within the system walls, is that really best for the patient? What system can be best in everything? I'd like the doc to make the best choice for me without having to worry about his employer.

Paul Sauer, MD (12/3/2011 at 7:45 AM)
Once the doctors are controlled by the hospitals and government, their compensation with fall. The doctors will have no leverage to negotiate salary. Will it become like England where doctors make $60,000 to $70,000 a year?

David Keller MD (12/2/2011 at 8:05 PM)
Missing from the article is the effect employment can have on physician productivity... I've seen clear evidence that employment makes physicians less productive and often less responsive to the needs of their patients. It's not all bad, but there are a number of negatives not discussed in the article.