ACOs Shine Spotlight on Physician Employment

Carrie Vaughan, May 10, 2011

There is a major movement toward not only alignment, but real integration ­between hospitals and physicians nationwide. Unfortunately, the transition to an employed physician model is not always a smooth conversion. Or a risk-free one.

Many physicians and healthcare organizations are still unsure about physician employment and can't forget the failure of ­employment models in the '80s and '90s. Others believe closer alignment and ­integration is the key to providing patients with ­better healthcare; improving quality, outcomes, and ­efficiency; and reducing healthcare costs.

Not gatekeepers anymore
The good news is physician ­employment is no longer based on the gatekeeper model, which is what the '80s and '90s under ­capitation and HMOs were supposed to be, says Brett Hickman, a Chicago-based national leader of the health industries strategy and planning practice at PricewaterhouseCoopers. Once patients had to leave the primary care ­environment for specialty care, there were no controls. It was a ­fee-for-service environment.

"We really didn't have true alignment across the whole spectrum," Hickman says, ­adding that the three biggest lessons healthcare ­organizations learned from that experience was that they overpaid for the value of a practice, didn't incentivize physicians to remain ­productive, and didn't realign incentives toward institutional goals.

The driving forces today are different. With the passage of the Patient Protection and Affordable Care Act of 2010, there is pressure from the government to build accountable care organizations. The belief is that entities such as hospitals, physician practices, and long-term care will deliver better care if it is coordinated and if financial rewards go to those organizations producing better outcomes.

Carrie Vaughan Carrie Vaughan is a senior editor with HealthLeaders magazine. She can be reached at

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