Behind Higher Physician Fees, a Big Problem Lurks

Jacqueline Fellows, July 2, 2015

Joining forces with a like-minded, larger medical practice may afford economies of scale, but physicians should be aware that it could be at the expense of patients, who are becoming more cost-conscious.

Now that King v. Burwell is no longer a distraction and millions of Americans' healthcare subsidies are safe, hospital and health system leaders can spend their energy preparing for the inevitable shift toward value-based care and all that move entails, which has included the search for similar care partners willing to enter into a joint-venture with or outright acquire.

The trend of hospital consolidation and physician group acquisition isn't expected to slow down. In fact, healthcare leaders believe that consolidation, whether it is with hospitals, physicians, or post-acute care providers, is a means to impact the financial goals of hospitals and health systems.


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According to this year's HealthLeaders Media Annual Industry Survey, respondents placed more importance on partnerships and alliances than investments in new care models and IT when evaluating how healthcare systems and hospitals would meet their financial targets over the next three years.

Nearly half, (44%) reported that physician-hospital alignment would have the biggest influence on financial targets, while 36% said it would rely on strategic partnerships with payers; 35% said strategic partnerships with providers would help them meet financial goals.

What those data points show is that healthcare executives realize that partnering for the future is almost a requirement, not a recommendation. In the race to grow larger in order to survive, however, special attention should be paid to the overall impact of that growth.

"In healthcare, as in many business scenarios, there is often strength [and leverage] in numbers," says Jim Stone, president of The Medicus Firm, a Dallas–based physician staffing and recruitment firm that also tracks physician trends.

Less Control
"Over the past few years, physicians have been increasingly acquired and hired by hospitals and health systems, and/or are merging with other groups to form larger entities. As part of a larger system, physicians may not feel as stressed about potentially being put out of business by increasing overhead, competition from larger systems, or decreasing reimbursements. However, as physicians become employees (vs. partner/owners), physicians do relinquish some control in exchange for perceived security," Stone says.

Some of the control that physicians may give up is negotiating with insurance companies. That's not necessarily a bad thing, negotiations with payers are typically headache inducers. But there is a downside (that has a short-term upside), but could have a long-term negative impact.

Jacqueline Fellows

Jacqueline Fellows is a contributing writer at HealthLeaders Media.

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