Physicians employed by hospitals enjoy richer benefits and potentially fewer administrative hassles, but physicians employed by private practice express higher satisfaction with their compensation packages, survey data shows.
Physicians working in physician-owned practices are most satisfied with their compensation packages when compared with colleagues working for universities or hospitals, a survey shows.
"A big trend we are seeing is that the hospital-employed physicians seem to be receiving better benefits and more recruitment incentives compared to those in the university setting and physician-owned practices," says ASPR Executive Director Jennifer Metivier.
"With the trends in more hospital employment, hospitals are doing all they can to entice physicians to become their employees. It is not surprising, honestly."
"Overall physicians are more interested in employment opportunities because they don't have to deal with the administrative and overhead issues. They come to work. They treat their patients. They do their paperwork and they go home. They don't have to worry about the business aspect."
Even though hospitals were able to offer richer benefits and recruiting packages and potentially fewer administrative hassles, Metivier says the survey shows that employed physicians working in private practice expressed the highest satisfaction with their compensation packages.
"That is because they are defining it and they are in charge of it themselves," she says. "They're happy with how they are getting paid because they're dictating. In a hospital or university setting, someone else is determining how they are going to get paid."
Of the 314 physicians in 26 specialties who responded, 44% employed by physician-owned practices said they received no funding for Continuing Medical Education compared to 17% of hospital-employed and 16% of university-employed physicians. They also were more likely to receive no time off for CME.
The same trends were seen with paid time off, sick time and recruiting incentives, ASPR reported.
Hospitals offered more signing bonuses, relocation assistance, student loan assistance, and malpractice insurance than other employers, with physician-owned practices offering the least.
"Hospitals and universities certainly have more capital and ability to offer some of those incentives," Metivier says. "You aren't going to find a lot of private practices finding money to pay for student loan assistance. That is something hospitals and universities are more likely to do just because of the financial situations that they are in. They have the capital available to offer some of these incentives and the additional time off, for example, for CME."
As a practical matter, Metivier says, physician-practices often don't have the staff to cover for absent colleagues.
"Whatever it is, they can't afford to have their physicians gone for long because there is nobody there to cover for them. Whereas hospitals have more physicians within the group or they have the ability to hire locum tenens to cover for them."
Physicians responding to the survey reported that they spend 11% of their time doing administrative work such as medical record documentation and chart reviews. However, 65% said they had no time built into their schedules for administrative duties. Physicians in university-owned practices were more likely to have designated hours for administrative work than those in hospital-employed or physician-owned practices.
"We were surprised to see how few hours were being provided for physicians to do that work," Metivier says. "They are spending 11% of their time doing it but a lot of them aren't getting a slot in their schedule to do it. They're having to do it at the end of the day after their clinical hours or squeeze it in where they can which diminishes their quality of life and takes away from their personal time."
It is ironic, Metivier says, that hospitals work so hard and pay so much to recruit physicians but risk losing them because they aren't given enough time for paperwork.
"That is an area that can be greatly improved upon if organizations want to keep their physicians happy. They need to identify more time for physicians to get their administrative work done within their set schedule," she says.
"If you can't keep your physicians happy they are going to go elsewhere and you are back to recruiting again, and that costs a lot of money to go through the process. You want low turnover and one of those key things for physician satisfaction is their schedule."
Less than twelve weeks after a strong tornado crippled a small Mississippi hospital, its interim CEO shares his thoughts on the way forward.
On April 28 Winston Medical Center in Louisville, MS, was severely damaged by an EF4 tornado that killed nine people in the rural county located 90 miles northeast of Jackson.
Interim CEO Paul Black had been on the job for less than one week when the storm crippled the 27-bed hospital and forced the evacuation and temporary closure of an adjacent nursing home.
Black spoke with me in the days after the storm about the medical center's efforts to provide care to a physically and emotionally scarred community.
He spoke with me again this week to provide an update on the medical center's recovery.
Black: We got the temporary facility was up and running by May 19, so we were in a temporary hospital unit that was provided by [Federal Emergency Management Agency] within three weeks of the tornado. That gives us the ability to provide hospital services to the residents here in Winston County. It's not everything we have going, but we are getting close to doing that.
We have the clinic open that is in front of the hospital and it opened about one week later. So, we are back to where we consider our 'new normal' as far as hospital services. We are in the process of repairing part of our nursing home so we can get 76 residents back home.
That is scheduled to open and take patients on Sept. 1. As far as the long-term prospects, we are still collecting data from insurance companies, talking to FEMA and others to determine what our final funding amounts are going to be or what resources we are going to have to rebuild.
HLM: How is the temporary hospital working for you?
Black: It's pretty sturdy. Once you get inside the structure you can't tell you're in a temporary. The inpatient area is a ward concept. There aren't designated rooms, so that is a little different than what people are used to. But we haven't had any complaints. People can put up with that if they are back home being taken care of and don't have to travel great distances.
The biggest issue on the inpatient side that we haven't come up with a solution yet is people are used to having a TV when they are in the hospital and we don't have that service right now.
HLM: Will you refurbish the hospital or raze it and rebuild?
Black: We found out that we did have some structural damage, especially in our three-story tower. So it's looking that it may be more cost efficient to tear down the existing building and rebuild.
HLM: How big would the new hospital be?
Black: We'd be back probably smaller as far as bed size is concerned, trying to offer the same basic services as we did prior to the tornado. We are pursuing the critical access designation.
HLM: Do you have a timeframe on opening the new hospital?
Black: I am not real sure on the construction start but I've been told anywhere from 18–24 months from the date of the storm. We are in a slow process right now. Once we get everything decided as far as funding and deciding what the plan is we are going to do our best to speed up the process as far as construction is concerned so we can get opened as fast as we can.
HLM: How far along are you on planning for the new hospital?
Black: We don't have the numbers yet from our insurance company. Once we get those we are also gathering some reports and giving it to FEMA to let them determine how much the funding is going to be. Once we get those numbers we can start making definite plans. We are now putting out RFQs for architectural services so we can be somewhat ready when those numbers come in and we can start making long-term decisions along those lines.
HLM: What clinical services are unavailable?
Black: We are able to do our geri-psych services but we don't have the facilities that would meet the code requirements to be able to house those patients. And of course, our nursing home is not operational. It will at least partially be back on Sept. 1. We do not have CT or mammogram services but we are looking real hard to try to bring some of that on site within the next month or so.
HLM: What is the community doing to access those services?
Black: They have to travel 20–30 miles to get the services that we were providing. It does put a strain on them, especially when you are talking about the primarily Medicare population that we service here.
HLM: Are you getting help from nearby providers?
Black: We have had a lot of offers for help. Right now we haven't had to rely on any one facility to help us out but if we do have a situation where we need help we do reach out to them. One of the biggest things that other facilities have done for us is for some of the employees we have had to lay off. Some other facilities are making room for them and letting them work part-time at least until we can bring them back on board.
HLM: How many employees were laid off?
Black: We ended up having to lay off about 130 employees. Most of them were in the nursing home. But we are optimistic about being able to bring the majority of them back.
HLM: How did you prioritize the recovery?
Black: Shortly after the storm, when you get your wits about you and you try to figure out what is going on, you start to work with the state department of health to get that temporary facility heading our way. That was our focus from the very beginning.
At the same time we were working on trying to get a building together to get our clinic back open. Those things came together pretty quick, three to four weeks to get those back on line. Once we started treating patients again our next focus was on what we do with the nursing home to get it back open.
Now we are in this slow phase where we are waiting on some evaluations and reports. In the meantime we are talking amongst ourselves about possibilities out there so that when we do get some concrete information that we can go forward fairly quickly.
HLM: What have you learned from this process?
Black: The biggest thing I found out is that the staff really comes together and understands our importance to the community. Sometimes we get a little jaded and come to think of it as just a job like everything else.
When you get into this type of situation you realize how much the community needs to have a hospital and how the employees really start to appreciate the fact that we are needed and that it's something that helps the community, not just from a healthcare standpoint, but from an economic standpoint as well.
HLM: How is the community doing psychologically?
Black: We are handling it OK. We've had our ups and downs, but every day brings a little bit of hope, a little better vision into the future. As each day goes forward and we can make some progress it will be a whole lot better. A big thing for us is when we can get some determinations and a plan for the new hospital that we can put out to the community. That is going to help everybody.
HLM: How are you communicating with the community at large?
Black: We do numerous things. We do some radio spots. We get out and talk to the community. We have our Facebook page. We try to put all sorts of notices and things like that out so the public can see as much as they can. We use the newspaper, all sorts of media to get the word out.
HLM: Any complaints about the recovery?
Black: Sometimes I get a little impatient, but that is just me wanting things to happen faster than they probably can. We want things to be done quickly, but we have to be patient in what we do so we don't knee jerk and make the wrong decision.
HLM: Are you still interim CEO?
Black: I'm still currently just the interim. No decision has been made on that, although things have been busy so that really hasn't come up here in the last few weeks.
HLM: Last time we spoke your office was a loaner pickup truck. Do you have an office yet?
Black: We have some temporary buildings. We rented some space about a half-mile from the temporary hospital. We have our business office, administrative, and medical records up here.
A large study of electronic health records systems, which includes automation of ancillary services such as clinical data repository, pharmacy, and laboratories, shows that they save money for third-party payers and patients, but not necessarily for hospitals.
Abby Kazley
A sweeping examination of more than 5 million inpatient records at 550 hospitals during 2009 identified savings averaging 9.6% per patient – or $731 – from the 19% of hospitals that used advanced electronic health records when compared with hospitals that did not.
The findings from researchers at the Medical University of South Carolina in Charleston were published in the most recent issue of the American Journal of Managed Care. Abby Swanson Kazley, an associate professor at MUSC's college of Health Professions, and a lead author of the study, spoke with HealthLeaders Media Tuesday.
HLM: Were you surprised by these findings?
ASK: I was surprised it was so high. Yes. We had done a similar study in the pediatric population and found there was not cost savings. So we were surprised it was so different in the adult population.
HLM: What was your base measure for cost per patient?
ASK: We looked at the mean cost per patient admission at hospitals—the mean overall total costs for patients with various conditions. The mean overall cost per admission for hospitals without EHRs was $10,790 and with advanced EHRs it was $10,203.
HLM: How did you define "advanced EHR?"
ASK: We wanted to pick a level that would be most consistent with the first requirements of Meaningful Use. It had to have automation of the ancillary services like the clinical data repository, pharmacy, laboratory, and radiology information systems, plus automation of nursing work flow with electronic nursing documentation, medication administration records, and also (Computerized Provider Order Entry).
HLM: Where is the savings coming from?
ASK: We don't have the granularity in the data to answer that but we can speculate. Maybe it's that the automation makes the care more efficient or maybe it is a better charge capture or a more accurate reflection of the care that is received and that patients aren't being potentially overcharged. Or maybe hospitals are more efficient because they have them.
HLM: Why did you need to examine 5 million records?
ASK: We wanted to be as inclusive as possible. There are differences in the types of systems that are used and there is a lot of hope and belief that electronic health records are going to be the magic bullet to increase quality and decrease cost but there haven't been many national studies that have looked at such a large sample of the population to really determine if that is true. We wanted to do our best to figure out whether or not they could save money.
HLM: Why did you limit the study to hospital inpatients?
ASK: We only looked at hospitals and the care that patients got during their stay in the hospital. The only way to really measure outside of the hospital would be if there were quite a few interoperable electronic health records and there aren't.
Right now it's entirely possible that patients are treated by their primary care physician or at a specialty clinic and that electronic health record may or may not communicate with the one in the hospital. It would be virtually impossible based on patient privacy and things like that to link those records together.
That is one of the problems we are facing with the implementation of EHR anyway. The different systems don't necessarily talk to each other. This was a group that we knew we could have control over the care that they had during their time in the hospital.
HLM: What does this say about the competitive advantages with EHR?
ASK: That is what the real implication is from this study. The almost 10% isn't necessarily money saved by the hospital. It is money saved by the third-party payers and patients. If they are interested in the cost of care, and I would certainly expect third-party payers are, and a certain number of patients that are informed of probably are too, to the extent that they can select hospitals that have automated electronic health records they may do so to save themselves that 10%, especially if you are talking about a patient who is going to pay for a procedure out of pocket.
Certainly anyone would want to save money on it if they believed the quality is the same or better, and many hypothesize that the quality is going to be better with these automated system but that was not something we considered in this particular study.
HLM: Your findings are from 2009. Do you expect savings to be greater as more providers adopt EHR and the systems become more sophisticated and interoperable?
ASK: It will be significantly higher when we have EHR systems that can communicate with one another and be interoperable. I suspect right now there is a lot of duplication and redundancy of care when you go to a couple of providers and have the same thing done.
So I think we are going to realize even more cost savings. You certainly would think as the people who work in hospitals become more comfortable with these systems we are going to see some true gains there.
HLM: How do you think ICD-10 will affect savings?
ASK: It is going to depend upon how well prepared the hospitals are and how smooth the transition is with the EHR systems. In some ways that makes it more complex for these EHRs. I didn't necessarily consider that in this study but I could see how it presents an additional challenge, especially for hospitals that are trying to implement and adopt and then make another change because of ICD-10.
HLM: What is the next big question to answer about EHR?
AKS: We need to continue to look at the cost and the quality of the care associated with EHR and we need to look at individual organizations and do system evaluations to see how well the EHRs themselves are working.
We need to look at a national sample which has been unusual in the research to date. That is why there has been so much interest in this study. A lot of studies out there just look at single hospitals and that doesn't tell you much, especially when this is such a national issue.
Boeing is the first employer to sign up with the accountable care organization offered jointly by Providence Health & Services and Swedish Medical Center. It is one of several employer-sponsored plans available in the Seattle area.
Seattle's Providence Health & Services and Swedish Medical Center are launching what they're calling one of the nation's first employer-driven accountable care organizations.
Boeing, with about 75,000 employees in the Seattle area, is the first company to sign up with the ACO, which will launch on Jan. 1, 2015.
Joe Gifford, MD, CEO of the Providence-Swedish Health Alliance, says the ACO will give Boeing employees and their families access to a full range of medical services from primary care to subspecialties.
"The part that is most notable about this is two-fold," Gifford says. "One is its scale. This is not a pilot. This is a huge chunk of the Boeing workforce. The other is that it is a direct offering for the employees of Boeing… the insurer plays a part, but is not the primary player at the table."
"The insurance company truly is there at the table but doing very specific things and the real direct arrangement is between the employer and the delivery systems," he says.
Providence and Swedish affiliated in 2012 in part to improve coordination of population health initiatives and value-based care.
Boeing Preferred Partnership ACOs with Providence-Swedish or UW Medicine Accountable Care Network will be one of several employer-sponsored plans available in the Puget Sound area for the airliner makers' nonunion, unionized, and retired employees.
"What Boeing has been most concerned with is providing high-touch care for their employees," Gifford says. "From the beginning they've told us that we are expected to provide a 'delightful' experience for the employees who become our patients. That has been a touchstone from the very beginning of this arrangement."
"Their vision, of course, is that they get more and more Boeing workers to be within the value proposition of an ACO arrangement," Gifford says. "In order to do so, they want to be sure that the experience of the employees as they touch our system is delightful. So, people are going to see a more high-touch concierge level as they walk in and interact with our healthcare system."
Amenities and benefits of the ACO include:
Same-day or next-day appointments for urgent primary care visits and acute care.
Concierge service that patients can reach by phone, email or Web.
Online and mobile access for scheduling primary care appointments, reviewing test results and emailing the care team.
Proactive support for preventive care and chronic disease management.
Shared decision-making tools to help patients choose the right treatment options for their lifestyle goals.
"The model of sitting down directly with these customers and their associated payers or administrators all at the same table is really a better way to go than the prior model of fee-for-service-based that does not deliver value," Gifford says.
ACOs are not a novel concept for Providence-Swedish Health Alliance. In December 2013 was approved as a one of only three Medicare ACOs by the federal Centers for Medicare & Medicaid Services and serves more than 25,000 beneficiaries in western region of the state.
The lengthy process of vetting potential partners allowed the not-for-profit system to reassess its strengths and weaknesses while it improved its balance sheets.
Dianna Morgan
Orlando Health Board Chairwoman
When Orlando Health announced last fall that it would court partners for a merger or affiliation, the six-hospital health system was following a well-read script used by scores of hospitals and health systems across the country.
So at first glance it came as a surprise late last month when Orlando Health announced that it would not pursue an affiliation with any of the eight or more health systems it had met with confidentially over the past eight months.
When you look a little deeper, however, the decision to go it alone seems well grounded.
Orlando Health Board Chairwoman Dianna Morgan says the long courting process allowed the not-for-profit system to reassess its strengths and weaknesses while it improved its balance sheets. In the end, she said the board at the health system decided they were strong enough to remain independent, at least for now.
"Through the process we just gained confidence about who we were as a system and our ability to compete without giving up independence or control," Morgan says. "We also left the board room agreeing that this is the right decision today, but knowing that this is a dynamic healthcare environment we are in and we need to always stay open to other options."
The health system controls 35% of the market in Orlando, making it the second-largest player behind Adventist Health System's Florida Hospital, which controls 52% of the market. The search for a partner was prompted in 2013 as Orlando Health recorded a $9.3 million operating loss in a year that saw the resignation of CEO Sherrie Sitarik.
In the past several months the health system has stemmed the red ink, thanks in part to a financial improvement plan implemented in 2012 that identified about $174 million in cost reductions for labor, supplies, and maintenance.
Financial Stability Regained
Under the leadership of Interim CEO Jamal Hakim, MD, Orlando Health turned the ledgers and is projected to generate a $36.4 million profit in 2014. Through the first six months of the current fiscal year, Orlando Health had a net operating income of $57.5 million compared to a $2.4 million loss over the same period of fiscal 2013.
Admissions are up too, passing the 100,000 mark for the first time since 2009. In April, Fitch Ratings affirmed an "A" rating for Orlando Health's $848 million outstanding debt, with a stable outlook.
The improved finances lessened the need for a deep-pocketed partner. Now, Morgan says, Orlando Health can focus on "nurturing" clinical collaborations already in place with UF Health and other partners in cardiology, oncology, neurosurgery, pediatrics, urology, and behavioral health.
"We have gone through a pretty exhaustive cost structure analysis and have better aligned our cost structure with our future projections," she says. "That was happening while we were looking at strategic partnerships. We were also seeing our financial results improve quarter-to-quarter. So, at the end of the day, the board I don't think felt we had a burning platform or a reason to enter into a more structured merger."
'Like an MBA in Healthcare'
Morgan says the 10 months have been educational for the board and senior leadership.
"Any process like this must start with a real clear vision of what you are trying to achieve," she says. "It began as an opportunity to gain financial strength. At the end of the day as we became financially stronger we looked at different values that the partnership could bring and yet felt that many of those values could be obtained through our own more disciplined management."
"We began this drive for improved financial results but came away with a strong appreciation for who we are here in a Central Florida community and appreciating our team culture, our physician relations, [and] our ability to continue to grow market share in a pretty healthy market."
Negotiating with top health systems from across the country also exposed Orlando Health to some of the best thinking from some of the best-run organizations in the country.
"You don't immerse yourself in that without coming away with best practices and operations in clinical services," she says. "You gain a little more confidence as you realize that your margins are actually higher than some of the people that you are talking with."
"One of our board members said this was like an MBA in healthcare going through this process. We do believe that as a result we have a board that is certainly is engaged and more educated as to what we need to be in the future."
With the move toward value-based care and population health, however, the mantra in healthcare now is bigger is better. At some point, is an affiliation or a merger for Orlando Health inevitable?
"The only way I would answer that question is by asking how big is big enough," Morgan says. "This is a community that has two large systems, Orlando Health and Adventist System. You would think we've got a healthy equilibrium in this market. We have a respected competitor, but when we get together we can meet the healthcare needs in this community, which is first and foremost our focus."
A year after proposed merger talks with Henry Ford Health System collapsed, Beaumont Health System agrees to combine operations with two other Detroit-area providers.
It was little more than a year ago — May 2013— that Detroit's Beaumont Health System and Henry Ford Health System abruptly announced that they had called off talks to form an integrated system.
Senior leaders at both health systems declined to comment on what scotched the $6.4 billion marriage that just seven months prior Henry Ford CEO Nancy Schlichting had described as "the absolute ideal partner for us."
Some observers said the sticking points centered around the disparate populations the two systems serve, and their diametrically opposite physician compensation models. Henry Ford uses salaries and capitated systems and Beaumont relies mostly on independent physicians and fee-for-service.
Others noted cultural hurdles between the two systems that could not be overcome.
Flash forward to June 2014, and the announcement that Beaumont, Botsford Health Care and Oakwood Healthcare had agreed "to combine their operations" into a $3.8 billion healthcare organization that will be called Beaumont Health, with Beaumont President/CEO Gene Michalski serving as its CEO.
Marianne Udow-Phillips, director of the University of Michigan's Center for Healthcare Research & Transformation, says this deal "has a better chance than Henry Ford because the cultures are much more similar and now they have gotten much further down the road. They have the support of their physicians and that is the key."
Why did the Henry Ford talks collapse?
"Henry Ford is a salaried physician model and has a very longstanding closed network practice that built a very successful health maintenance organization and has that sort of mindset. Beaumont is an independent practice model and the physicians are paid predominantly fee for service," Udow-Phillips says.
"Those two fundamental issues were very important in what made it very difficult for them to come together in a merger."
"In addition to that you have a geographic issue where Henry Ford, even though they have a location in Oakland County, it has been very strongly anchored in Detroit, and you have Beaumont very strongly anchored in a wealthy suburb of Detroit," she says.
So why will this effort "to combine their operations" (the three systems have avoided the "M" word) work with Botsford and Oakwood?
"These hospitals have a more similar profile. All of the physicians are predominantly fee for service and independent practice. There are some employed physicians but not the majority," Udow-Phillips says.
"And they're in the suburbs of Detroit: Dearborn for Oakwood; Farmington Hills for Botsford; and Oakland County for Beaumont. So they form a ring around Detroit. They have a little bit more similar profile in terms of the type of patient populations they are serving."
Another Culture Clash Unlikely Allan Baumgarten, a veteran observer of the shifting hospital landscape across the Midwest, agrees that a culture clash is unlikely now that key stumbling blocks have been removed.
"There were other disagreements about who would lead the combined organization and would the combined organization maintain two academic medical centers (Beaumont started a medical school with a local university a few years ago)," Baumgarten said in an email exchange.
"Clearly these parties have agreed that the Beaumont brand is more valuable than Oakwood or Botsford."
As for changing the care delivery landscape, Baumgarten provided this analysis:
"Based on revenues in 2012, the combined system will have 30% of the hospital market in the three-county Detroit area (Wayne, Oakland and Macomb). That makes them the largest system it what is a relatively unconsolidated market.
Next largest is Henry Ford at 22.8% (Henry Ford just got a credit downgrade over concerns about operating income). I don't think that 30% market share is enough to attract opposition from the (Federal Trade Commission/Department of Justice), although a 40% Beaumont-Ford combination would have gotten closer scrutiny."
Udow-Phillips says the deal will likely face more than a passing glance from the FTC.
"Every merger these days is getting a lot of scrutiny," she says. "In this case there is quite a bit of competition in the marketplace in this region and so I am predicting it will go through with regulatory approval but we can't be 100% sure."
Better Negotiating Ability
Baumgarten says the launch of Beaumont Health comes as hospitals in the Detroit have seen inpatient days drop steadily since 2007. "Even the surge in enrollment in the Medicaid expansion and individual plans is unlikely to change that trend line. That's one reason why I think that the assurances offered of achieving savings with no layoffs may not be very reassuring," he says.
"Further, Medicare and other payers are pressing hospitals to reduce readmissions, linking payments more closely to performance and cost savings. These hospitals are hoping that investments in health IT and care management systems spread over a larger organization and more patients will have a better return."
Udow-Phillips says the deal will give the new Beaumont Health "significant leverage and it increases their negotiating ability with the health plans in the region."
"It probably doesn't change too much from a clinical care perspective," she says. "One would hope that they are better on integration and coordination of care for patients who see physicians in these systems. But I don't think it will change too much of the profile of who is delivering what and where in the region."
Udow-Phillips says the chances are good that Beaumont Health will become a reality by the end of the year, but she warns that "they aren't across the finish line yet."
"We are going to have to wait and see how things play out," she says. "They seem to have settled the CEO issue, at least initially. We have to see what the roles are for the boards and the other leaders of these organizations over time. There is much yet to come on this one, but for right now they seem to be on a pretty good path to success of bringing this together."
The growing importance of population health management and value-based care as well as market share and leverage with payers is spurring much of the trend toward physician hiring.
The shift toward the employed physician model has grown from a stream to a deluge, accounting for more than 90% of new physician job openings at hospitals, medical group, health centers and other healthcare facilities, Merritt Hawkins reports.
The findings were made public Monday in the Irving, TX-based physician recruiters' annual report, which tracked 3,158 physician and advanced practitioner recruiting searches the firm conducted from April, 2013 through March 2014.
Of these assignments, more than nine in 10 featured practices in which newly recruited physicians would be employed. Less than 10% of the recruiting assignments featured independent practice settings, such as partnerships, concierge practices or solo practice settings, down from over 45% in 2004.
Travis Singleton, senior vice president at Merritt Hawkins, says the Patient Protection and Affordable Care Act, with its emphasis on population health and value-based care, and the growing importance of market share and leverage with payers is spurring much of the trend toward physician hiring.
"Everyone has glommed on to the employment model; physicians because they are trying to mitigate risk and they are looking for financial help and they have all the issues of medicine and small business concerns," Singleton says.
"On the other side, whether you are a hospital, urgent care, concierge or some mix thereof, it enables you better to influence the behavior of your clinicians. And increasingly, in all of these delivery systems, that clinician is not just a physician. It's a team health environment… and the only clear mechanism that allows you to push all those different cultures and providers and modalities in one direction is employment."
Despite the persistent grumbling from many physicians about a loss of autonomy as employees, Singleton says the Merritt Hawkins search results paint a different picture.
"This is not a survey where I may catch someone on the wrong day and this is what they want to do or what they are threatening to do. This is what they did in the past year," he says.
"It clearly shows that if you're a newly hired physician or provider, whether you've been practicing for 30 years or you are just out of residency, you have a nine-in-10 chance of taking an employed job. I am hard pressed to see that we are forcing people into that model. You wouldn't see such drastic numbers if that is not what both sides wanted."
Family Docs Remain the Top Search
For the eighth straight year, family physicians and general internists were the top two recruiting requests. Singleton says the demand for primary care physicians comes in large part from their enhanced roles as team care leaders for accountable care organizations and other value-based delivery networks.
"On a singular search the difficultly level for finding primary care physicians is the same as it has been in years past," Singleton says. "Unfortunately we aren't talking about single searches in family practice anymore. Primary care is the name of the game. It may not be an integrated network calling me for one or two docs to fill a void. They're calling for 50 or 100 at once because that is the only way to accomplish their population health goals."
"Primary care compensation never will outstrip specialists. That is not how our system is built," he says.
Singleton says the rise in compensation for primary care doctors "is as much about demand as it is about who is paying them."
"You see this in pediatrics as well. In years past when it was private, smaller groups they could only do so much. Now you have hospitals that have the downstream revenue, inpatient revenue, they are able to be more competitive."
The demand for primary care access has also fueled search requests for nurse practitioners and physician assistants, which increased by 320% over the last two years, Merritt Hawkins reports.
"In simplistic terms you have to preserve access. Being able to give patients the portals to get the right care at the right place by the right person," Singleton says. "Most Americans today are dealing with some sort of health issues: obesity, diabetes, mental health. Our specialists are maxed out. Who can do the coughs, sniffles, and basic care? Some would argue that a nurse practitioner or a physicians assistant is in a better position to give more attention to those types of patients; trying to keep them out of the ED, in other words."
The dire need for primary care access has prompted hospitals and other providers to ignore the territorial sniping between physicians' associations and advanced practice nurses.
"They're saying 'we are not going to wait on scope-of-care arguments. This is my primary care access mission. This is my population health mission. I cannot do this with physicians alone, so I am making the call. We are employing 100 NPs this year,'" he says. "You have to practice at the top of your licenses. You cannot get out of this alone without help."
A notable exception to the shift toward employed physician models is the rise in concierge practice. Merritt Hawkins conducted 32 searches last year, up from 10 searches two years ago. Singleton says his search data probably underreports the move towards concierge services because recruiters often aren't needed.
"If you are a provider who is fed up, whether it's your legal costs or compliance or the business of medicine itself, the easiest shift you could make is to become a concierge physician," he says.
The shift also meshes well with the move toward consumer-driven healthcare. "We are seeing some of the same trends in urgent care and freestanding ERs towards convenience medicine," Singleton says.
"People are coming to understand this consumer-driven, convenience care area of medicine and the push to outpatient care. Concierge is a good reflection of that. Healthcare for so long has been insulated to the consumer. They haven't had to appeal to the consumer like they do now."
Speed Bump for Value-based Care
Merritt Hawkins' report also shows that the move toward value-based physician incentives stalled in the past year. In 2013, 39% of Merritt Hawkins' search assignments offered a production bonus featuring at least one value-based metric such as high patient satisfaction scores or low hospital readmission rates.
In 2014, that number dropped to 24%, which Singleton says indicates that employers are struggling to create physician compensation formulas that incorporate both volume- and value-based metrics.
"They love the idea of going to a value- and outcomes-based compensation model, but we are all struggling with how to accomplish it," he says. "We saw a spike last year and everyone said 'Oh gosh! This is where we are going!' This year we saw a bunch of health systems say 'let's wait until we have a clearer picture of the ACA.'"
Physicians are starting to push back too, Singleton says, but not because they're opposed to value-based compensation.
"People think they are just greedy physicians who want to be paid. Not the case," he says. "Most physicians will tell you this is the right direction for healthcare. They just want a fair formula in place, especially when you look at team-based care and integrated networks, where you have all of these different mechanisms and value components that they are supposed to be judged and paid on. There are some things that we don't know how to adjust yet. And that is what the numbers reflect."
In the coming year, Singleton says he expect providers will continue to adjust value-based compensation while waiting to see how the ACA plays out.
"You are going to see people start to increase what that total compensation affects," he says. "Even last year, when we saw that big spike, we looked at all of these different programs that entered into this value-base and found it only influenced 5% or 10% of the total compensation."
"And we have to have a better roadmap of the ACA to know how we are going to be judged and how the government is going to pay us before we can put a format in place that measures it."
The deal between Banner and the University of Arizona Health Network is designed to improve quality and access to healthcare across the state, while lowering costs through coordinated value-based care.
Banner Health, the University of Arizona, and its affiliated University of Arizona Health Network announced Thursday that they will create a statewide healthcare organization.
The affiliation would generate $1 billion in new capital and academic investments, and would combine more than 37,000 employees, making it the largest private employer in Arizona, according to a joint press release.
Thursday's announcement follows authorizing votes from the boards of directors at UAHN, Banner, and the Arizona Board of Regents. The definitive agreement is expected to be finalized in the third quarter, but it would have to be approved by the three boards.
Banner President and CEO Peter S. Fine said in prepared remarks that the deal, outlined in a Principles of Agreement document, meshes with Banner's "vision… to sustain a position of national leadership. This opportunity to join with a premier academic organization significantly advances Banner towards this vision."
"In addition, we're especially mindful of UAHN's legacy of excellence in Tucson and throughout the state, which must be maintained, nourished and strengthened," Fine said.
Supporters of the new healthcare organization say it would improve quality and access to healthcare across the state, while lowering costs through coordinated value-based care, and population health models that emphasize wellness.
It would also allow the UA Medical Center to expand capabilities for complex academic and clinical programs such as transplants, neurosciences, genomics-driven precision health, geriatrics, and pediatrics while creating investment opportunities in other areas.
On the ledger, the affiliation would improve the finances of UAHN by eliminating persistent shortfalls and low operating margins. This would include eliminating UAHN's $146 million debt burden, providing $21 million for the purchase of land now leased to UAMC, and spending $500 million over the next five years to expand and renovate the medical center and other capital projects, including a multi-specialty outpatient center to be built in Tucson.
Among its many selling points, the deal also:
Creates a $300 million endowment which will provide a $20 million per year revenue stream to advance the UA's clinical and translational research mission.
Preserves historic funding levels between the clinical and academic partners in addition to a $20 million per year enhancement.
Allows additional funding support based on growth in revenues generated by the clinical and academic partnership.
Sustains a relationship with UA, anchored by an academic division within Banner. The UA Medical Center – University and South Campuses and Banner Good Samaritan Medical Center and the faculty practice plan will support the growing needs of the Colleges of Medicine in Phoenix and Tucson and create a value-based delivery system.
"With healthcare here in Arizona and across the nation facing new challenges and opportunities every day, this agreement will allow the Arizona Health Sciences Center and the entire UA to advance our mission to provide education, conduct research and enhance patient care that will transform healthcare at the state and national level," UA President Ann Weaver Hart said in prepared remarks.
Resolute Health Hospital is a test lab for population health that links all providers in Tenet Healthcare's network and the hospital on a single EMR to coordinate care.
Money talks.
Tess Coody-Anders
CEO at Resolute Health Hospital
With that in mind, Tenet Healthcare Corporation is shouting out its $200 million commitment to population health and value-based care with the opening this week of its 128-bed Resolute Health Hospital in New Braunfels, TX.
Resolute Health Hospital is Tenet's 79th hospital, and the 19th in Texas for the Dallas-based chain. Situated on the fast-growing I-35 corridor between San Antonio and Austin, the 365,000-square-foot Resolute Health Hospital has all the amenities that we've come to expect from newly built acute-care hospitals: all private rooms, state-of-the-art HIT, opulent decor, and a range of lucrative service lines including cardiovascular and orthopedics.
It is not so much the capital projects or the 56-acre "wellness campus" that make the Resolute Health Hospital campus so intriguing. It's the strategy behind the investment. Tenet is using Resolute Health Hospital as a test lab for population health that links all providers in the network and the hospital on a single EMR to coordinate care.
Many health systems build their population health models around anchor hospitals, a one-stop shopping strategy modeled somewhat like suburban shopping malls.
Tenet turned that model on its ear and built Resolute Health Hospital around its population health model.
Tess Coody-Anders, CEO at Resolute Health Hospital, says building the hospital was the next-to-last piece of a project on the wellness campus that was part of the design when Tenet launched the pilot nearly four years ago.
"We started with community health and population programs first. Based on what we saw with our health trends, we opened an endocrine and diabetes institute," Coody-Anders told me.
Resolute Health Hospital
Wellness Center to Come "Then we opened two in different communities urgent care centers where we saw information just getting siloed off in the urgent care environment. Then we began adding primary care clinics and, of course, the 200-plus person clinical integration net. And then this week culminated in the opening of the hospital."
The 25,000-square-foot wellness center opens in September, capping the list of capital projects. I asked Coody-Anders why Tenet didn't just build the hospital first, and then build the provider networks around the hospital.
"It is absolutely the most important pole in the tent that we are building an integrated delivery system and we don't want that delivery system to be wholly dependent upon or focused on inpatient acute care revenue or services," she says.
"By beginning our relationship with the people we serve around health and wellness issues, we are able to more clearly communicate to physician partners, business partners, [and] payers, that that was our genuine focus, to move toward a population health environment where we are prepared to be paid for performance and not just what we do to you."
"So, the hospital," says Coody-Anders, "is an incredibly important part of what we are doing. But to be honest, for a while, we even looked at whether or not we needed to build a hospital."
The healthcare landscape has changed a lot in the past four years, and the incremental rollout at the Resolute Health campus gave Tenet the chance to make significant design changes in the hospital along the way.
"In the beginning there was a lot of discussion about lots of beds. We looked at the health trends and the outmigration statistics for the area and we saw that in some cases better than 60% of inpatient services out-migrated to Austin or San Antonio. We realized there was a need for additional acute care beds," she says.
Emphasis on Prevention "Then we modeled out what we wanted to do in the way of prevention and ambulatory services [and] looked at some projections at where things could shift to the outpatient environment in the next 5-10 years. We felt that (128 beds) was a more appropriate level to open at, despite the fact that this area is growing at about 5% a year."
The hospital is designed for vertical expansion and could add as many as 200 beds.
The wellness campus is includes a fitness center, health-oriented restaurants, walking trails and an integrative medicine center, which provides complementary therapies such as nutrition counseling, fitness instruction, and lifestyle coaching.Retail shops and a women's health center will open in the fall.
Coody-Anders says Resolute Health benefits from "a fairly robust payer market." "Our payer mix is more favorable from a traditional fee-for-service environment than our larger metropolitan neighbors, with better than 33% of our market being managed care, 33% being Medicare, [and] less than 9% Medicaid," she says.
Integrated Data
Resolute Health Hospital's first ER patient this week exemplifies how the hospital will provide care. The woman brought her medical records encrypted on a Resolute Health BeneFIT swipe card.
"As she was arriving by ambulance, because she was a patient of one of our primary care providers in the clinically integrated network and has visited our Resolute Health outpatient urgent care, we were able to pull up her medical record and see her health and medication history before she arrived," Coody-Anders says.
"We were able to swipe her smartcard upon arrival and she was instantly registered and all of the details from the ER were added to her health record. Since she was discharged, a navigator has already called her to set up an appointment to see an educator and members of our integrated care team to continue the process of getting her better and keeping her out of the ER again."
In the coming months, Resolute Health will look to build accountable care organizations with BlueCross BlueShield of Texas and some area employers that want to manage health and wellness for their employees.
How will the organization know if this experiment works?
"We are measuring at the unit level. If it's an enterprise, each of the business units has goals that are created to contribute to the enterprise-wide financial goal that we have," Coody-Anders says. "It will take some time. We are talking about five to seven years to see the kind of EBITDA diversification that comes from being engaged across the continuum."
"The early signs [indicating that] we are successful with this investment will be employer interest in working with us on this, followed by the large payers. We are also launching our own health plans for individuals and small businesses and that will definitely help us to align incentives between our members and the delivery system."
Coody-Anders sees Resolute Health's role as "the innovation lab" for one of the nation's largest for-profit hospital chains.
"We are not betting the company on what happens here," she says. "But we can treat it as a crucible for innovation and see what works and roll it out in other places."
Described as "neither a merger nor an acquisition," the deal between Alexian Brothers Health System and Adventist Health to form a "joint operating company" is intended to reduce overhead and improve economies of scale as they move toward population health models.
Mark A. Frey
President and CEO of Alexian Brothers Health System
Alexian Brothers Health System and Adventist Health System are moving toward a "joint operating company" that that will create an integrated health system in Chicago's northwestern suburbs.
The deal, announced with a letter of intent agreement last week, is expected to be completed by the end of the year. It allows both health systems to keep their religious identities and missions, while integrating operations, reducing overhead, and improving economies of scale as they move toward population health models.
The two health systems say they have signed a letter of intent to move toward the JOC. David L. Crane, president and CEO of Adventist Midwest Health, and Mark A. Frey, president and CEO of Alexian Brothers Health System, were in agreement as they explained the reasons why in a telephone interview with HealthLeaders.
"It is neither a merger nor an acquisition," Frey clarified. "Both of our respective companies will retain our assets and our balance sheets remain intact. Alexian Brothers Health System continues to own and operate its assets and Adventist does the same thing. Our parent corporations will be able to consolidate the earnings. We will share a profit-and-loss statement with our respective organizations. So it is a shared P&L. None the less, both companies will continue to own their assets."
ABHS, part of St. Louis- based Ascension Health, operates five hospitals in the northwestern suburbs. AMH, part of Adventist Health System, operates four hospitals in the area. A definitive agreement between the two systems would have to be cleared by the state of Illinois. Frey and Crane say they anticipate those hurdles to be cleared in the coming months and the deal finalized by the end of the year.
Crane says the JOC came about in response to Chicago's changing healthcare market.
"The truth is that we are both strong organizations but as we looked into the future we recognized that to really be able to do population health well in the accountable care environment we needed scale," Crane says.
David L. Crane
President and CEO of
Adventist Midwest Health
Frey describes ABHS as "a little bit undersized" for Chicago.
"That is not to say we are not a large organization. We are. We have a niche position in the northwest suburbs of Chicago. As you look out over the next five or 10 years you are going to need a much broader network."
The JOC will combine nine hospitals and more than 3,000 physicians now affiliated between the two systems.
"It gives us a geographic footprint almost overnight that really enhances our ability to deliver services across a broader part of the geography in Chicago," Frey says.
Allan Baumgarten, a close observer of the shifting landscape for hospitals and health systems across the Midwest, says the JOC is a good fit for both systems.
"The two systems are very similar and compatible - west suburban geography, generally affluent patient base, similar payer mix, with less than 20% Medicaid patients, both part of strong multi-state, religious networks," Baumgarten said in an email exchange.
"The sum of the parts gives them strength against the Advocate hospitals, which is the largest system in the state, and which has two very strong hospitals on the west side, Lutheran General and Good Samaritan. Based on 2011 net patient revenue numbers, the two combined have about 6.8% of the market, which is well below Advocate (15.3%) but put Alexian-Adventist in the top four."
The following is an edited transcript.
HLM: Why a JOC?
Crane: The structure allows two strong organizations to work together and yet be able to preserve their mission and their ownership of assets. Adventist Health Systems has done this very successfully in Denver for the past 20 years in its partnership with Catholic Health Initiatives. We like it because it's a hybrid that allows us to do business together and collaborate without having to give up legacy assets. Both of us have a proud heritage. We didn't want to give up that identity but we wanted to create something with enough scale that we could do what is required of us going forward.
HLM: How does this work with your parent systems?
Frey: Both of our parent organizations consolidate our financials and roll them up into the national organizations. Both of the national parents will continue to roll up the P&L, and consolidate that on the national P&L, just like they do today.
Adventist has their own balance sheet and we have our own balance sheet.
Were we build something together, say theoretically we build three or four ambulatory care centers, then that would probably go on the balance sheet of the new organization's umbrella company.
But we don't have anything on that balance sheet today. That is not to preclude that from happening in the future.
HLM: How will the JOC change the way you do business?
Crane: The biggest advantages for us is that we will be able to do our clinical integration work together. Even though we both have fairly advanced PHOs and we have a large number of affiliated positions this will double our capabilities. As we make these big investments in technology, whether it is a population health registry, risk systems, the ability to stratify and manage risk in this ACO world, this gives us the opportunity to do that together.
The second thing is we both are larger organizations, but we need to continue to work on that cost curve. There are overhead redundancies that we can eliminate. We want to take advantage of that. We don't think the future is more reimbursements. We think the future is less reimbursements.
HLM: Have you identifies redundancies or other areas that you might cut?
Frey: We do have two complete C-suites and we have two complete sets of infrastructure that support our respective organizations. So, when you think about the clinical delivery system at the local level and the work that is being done at the bedside, I don't think there is going to be significant changes there.
Where we are going to see changes and try to take out redundancies and duplication is more at the executive level and more at the infrastructure and administrative levels where we have two departments of everything, marketing communications, legal.
Crane: Neither one of us wants to impact the clinical care at the bedside. We both have benchmark quality standards that we want to maintain. We are looking at those places where we don't impact patient care but where we can achieve more economy.
Management would be one. All of the overhead kinds of services that we could do together, whether that is centralized billing, or revenue cycle or marketing, when you can spread your costs over nine hospitals instead of four or five it makes us more efficient.
HLM: You have nine hospitals in Chicago between the two systems. Will any of them close?
Frey: I do not anticipate that at all. There is appropriate spread of geography in the different markets. These facilities are positioned extremely well in their respective markets.
Crane: All of our hospitals are in situations where we are doing really quite well. Even though the Chicago market in general has excess capacity nobody that I am aware of in our group of nine facilities is in that kind of immediate jeopardy.
It's true that as acute care continues to change that demand curve is going to change too. But for today, the future looks pretty solid for all of our hospital campuses.
HLM: Will there be conflicts over reproductive health services?
Frey: Because Alexian Brothers Health System is a Catholic healthcare organization, part of Ascension, we are bound by the ethical and religious directives. Adventist has not a completely dissimilar approach. They are able to do some things that we are not able to do. That won't change. To the extent that today they may do sterilization procedures or offer contraception, those particular things that they do today won't change in the future.
HLM: Have you JOC'd yourself out of a job?
Frey: I will be the CEO of the new organization. I am not JOC'd out of a job.
Crane: I am happy to serve as long as I can add value. We recognize that at some point in the future there may be economies that would make us less necessary, and I am speaking for myself. That may happen but that is the last thing I am thinking about.
