Current Hospital Employment of Physicians Different from Similar Trend in the 1990s

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HEP-thumb5With all of the talk surrounding the recent trend toward hospital employment of physicians, many industry veterans might recall a similar rush in the 1990s, writes Mark Hagland over at Healthcare Informatics, that eventually imploded.

The Deloitte Center for Health Solutions recently issued a report titled, “Issue Brief: Physician-Hospital Employment: This Time It’s Different,” that compares both eras.

The report recalls the numerous reasons why the trend faltered in the nineties and concludes: “There was…a general lack of understanding in the 1990s that the hospital enterprise and the physician-practice enterprise operate under different business models (e.g. billing, staffing, revenue) and have some different regulatory requirements.

“This time around, hospitals cannot afford to fail because the need to integrate and the competition for essential physicians are heightened by the healthcare system’s overall transformation. Hospitals need to identify, employ, and align with the right physicians or risk being left behind.”

Bob Williams, M.D., national medical leader of Deloitte Life Sciences Health Care Consulting, told Hagland in an interview, the main difference between the 1990s and now is economics.

“I don’t think the economics were aligned around it as they are now in terms of the opportunity,” he said. “And also, people didn’t understand that hospital operations and physician operations are very different, and how you lead and manage a hospital and how you manage a physician group are fundamentally different.”

Plus, hospitals aren’t in as much competition with the commercial physician practice management companies in buying up physician practices as they were in the nineties, he added, when the intense competition drove many organizations to impulse buys that ultimately lost them money.

The market is also “…demanding clinical integration…” and doctors and hospitals must now “…provide more evidence-based care, more coordinated, integrated care, and begin to assume some risk for those populations, and create an economic incentive to provide higher-quality care,” a fundamental transformation that simply wasn’t happening in the 1990s.

Hospitals and physicians also see themselves more as partners in the delivery of care than they did in the nineties, he said. The truly successful hospitals are engaging physicians and involving them in policy-making and vision-building, even with regards to IT. “…[I]f if the physicians are treated as employees rather than co-owners of the enterprise with incentives for its success, that could lead to failure.”

The question must then be asked, how informed are physicians of the latest trends? According to Williams, not as much as they should be, but with good reason.

“…I do think there is some general awareness of some of the trends. Most of the physicians are heads down seeing patients every day, and don’t have the time, really, to stop and step back and put it all together. Increasingly, in pockets, physicians are seeing that there’s a significant opportunity for them, because so much is driven by political decision-making.

“But most of the physicians are delivering patient care and doing a good job of it with the tools they have; but there’s been a significant increase in the number of physicians who truly understand what’s going on. But when they drive home at night, they’re asking themselves, did I do the best job today providing care with the tools I had? And that’s how they evaluate themselves at the core, and then ask themselves whether they have been able to be financially successful and stable.”

As healthcare executives, what is your view on the hospital employment of physicians? Is the current trend different from the failed trend of the 1990s? Is your organization actively hiring more physicians and acquiring more medical groups?

-by Pete Fernbaugh

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