The Polarized Hospital-Physician Relationship

Elyas Bakhtiari, for HealthLeaders Media, September 18, 2008

The traditional voluntary medical staff model that characterized hospital-physician relations for decades is now fading. That much we know. What's less clear, however, is what the new relationship between physicians and hospitals will look like when the dust settles.

A quick scan of news reports and our own coverage may give the impression that the hospital and physician are now more at odds than ever—doctors are increasingly refusing to take ED call without compensation and are frequently opening facilities that directly compete with the hospitals they used to partner with.

But it wouldn't take much digging to come up with a similar number of news reports that paint the opposite picture. Physicians are more willing these days to work directly for a hospital or health system as an employee, sacrificing autonomy for the security of full integration.

So which is it? Are hospitals and physicians becoming more separate and competitive or more integrated?

The answer is both, according to a new study by the Center for Studying Health System Change. The relationship is becoming polarized as fewer doctors choose the "middle ground" of voluntary medical staff coverage. Doctors are forking in one direction or the other—employment or competition.

Most markets have seen an increase both in the number of physicians—specialists and primary care doctors—employed by hospitals as well as the number of new competing physician-owned facilities, such as ambulatory surgery centers and in-office imaging.

The trend toward employment is in part a defensive move—hospitals "employ specialists to preempt competition from specialist-owned ASCs, specialty hospitals, or imaging facilities," according to the HSC report.

Hospitals and physicians have often faced very different incentives, and employment is a necessary step to get both parties on the same page, says self-proclaimed healthcare futurist Jeff Bauer, partner with ACS Healthcare Solutions. "The clear path to success for the hospital of the future is employed medical staff."

But the trend is also driven by the changing physician culture. Tired of clawing through the bureaucracy of today's healthcare system just to break even, many physicians are opting to enter a hospital's fold so they can focus on medicine and maintain some semblance of work-life balance.

Yet despite the culture shift, others still choose entrepreneurialism over employment. It is a path with higher risk, but also higher reward. And technological advancements that have opened doors for additional revenue in outpatient settings have made the rewards more worthwhile for those willing to take the chance.

There are strong incentives for physicians to pick either option. Not that there aren't opportunities for collaboration that don't belong solidly in either track—hospitals and physicians can align through joint ventures, service line management, and physician-hospital organizations.

But in most markets, physician-hospital relations will continue to split along these two disparate paths.

Doctors will not, however, return to the voluntary model anytime soon.

Elyas Bakhtiari is a managing editor with HealthLeaders Media. He can be reached at

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