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Doctor-Hiring Rush is On

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   April 02, 2013

This article appears in the March 2013 issue of HealthLeaders magazine.

In the years to come, experts may look back on healthcare reform as the time that not only made improvements in the quality of patient care and sparked efforts to reduce costs, but also when doctors traded their independent practices for hospital employment. There's been a marked uptick in the pace with which physicians are being employed by hospitals; in fact, employment of physicians and surgeons is expected to grow by 24% from 2010 to 2020, nearly twice the rate of growth for all other occupations, according to the Bureau of Labor Statistics.

"[Organizations] have to grab the opportunities when they occur. I'm not referring to buying practices; I'm just referring to employing physicians," said Robert Shapiro, CPA, senior vice president and CFO for North Shore-Long Island Jewish Health System in Great Neck, N.Y. The system employs 2,600 physicians in a teaching environment, and one-third of those were hired in the past 18 months. Shapiro was one of 30 healthcare finance leaders to attend the 2012 HealthLeaders Media CFO Exchange and offer his thoughts on a variety of topics, including
physician employment.

"We are getting ready for what we feel is the future," Shapiro said. "The thing is, if you truly believe that things are changing quickly in your market, then you have to act. Your marketplace will dictate how quickly you act and how much you spend. But after that we have to go through a process of rationalizing what people are doing, making sure that redundancies are dealt with. I know it sounds like 'buy now, figure it out later,' but the market is very competitive in the downstate New York City area."

Although counterintuitive, if rushed, employing a physician can actually decrease organizational alignment and ultimately impact the bottom line. If the hospital's financial and clinical goals aren't clearly defined and the physician's rationale for employment isn't clearly understood, then the employment arrangement can be disjointed from the outset, causing poor performance or an expensive termination of the agreement. To avoid this, there are several areas healthcare leaders should examine before entering into an employment arrangement.

Reasons physicians seek employment

The fervor by physicians to become employed stems from the decline in reimbursements as well as the increase in practice expense and the complexities associated with adding electronic medical records and tackling billing changes. While understandable, some in healthcare believe it also may signify the near demise of the independent physician.

Statistically, the medical staff model of working with independent physicians is in decline, according to the September 2012 HealthLeaders Media Intelligence Report, Physician Alignment: Integration Over Independence. While the medical staff model is currently used by 67% of organizations, that will drop in three years to 50%, the report shows. The change in the healthcare environment is causing seasoned and green physicians to make a flight to safety by working
for hospitals.

There are advantages and disadvantages to hiring less-experienced physicians; the same is true for bringing on more experienced doctors. However, friction can arise if the hospital's goals compete with the physician's. While hospitals, for the most part, are looking to add physicians to broaden networks, fill service line gaps, reduce redundant testing, improve patient referrals, and reduce costs by improving care coordination, physicians' objectives often are more personal.


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Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media.

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