The Wall Street Journal
More Physicians Are Going to Work for Hospitals Rather Than Hanging a Shingle
The traditional model of doctors hanging up their own shingles is fading fast, as more go to work directly for hospitals that are building themselves into consolidated health-care providers.
The latest sign of the continued shift comes from a large Medical Group Management Association survey, which found that the share of responding practices that were hospital-owned last year hit 55%, up from 50% in 2008 and around 30% five years earlier.
The biggest U.S. physician-recruiting firm, Merritt Hawkins, a unit of AMN Healthcare Inc., said the share of its doctor searches that were for positions with hospitals hit 51% for the 12 months ended in March, up from 45% a year earlier and 19% five years ago. The number of searches for physician groups and partnerships has dropped.
The trend is tied to the needs of both doctors and hospitals, as well as to emerging changes in how insurers and government programs pay for care. Many doctors have become frustrated with the duties involved in practice ownership, including wrangling with insurers, dunning patients for their out-of-pocket fees and acquiring new technology. Some young physicians are choosing to avoid such issues altogether and seeking the sometimes more regular hours of salaried positions.
Attila Barabas, a urologist who completed his residency in 2006 and then worked briefly in a group practice, is now working for a hospital in New Hampshire and next year will move to a hospital in Wyoming to be closer to family. As an employed physician, "I can really focus only on practicing medicine, which is nice," he said. "I don't have to worry about the business side of the operation."
Hospitals are also seeking to position themselves for new methods of payment, including an emerging model known as accountable-care organizations that is encouraged by the new federal health care law. These entities are supposed to save money and improve quality by better integrating patients'care, with the health-care provider sharing in the financial benefits of new efficiencies.
The consolidation wave is raising red flags among some regulators, researchers and health insurers, who warn that bigger health systems can use their leverage to push for higher rates. "We've always been concerned about combinations that are being done to increase prices," said Karen Ignagni, chief executive of America's Health Insurance Plans.
The American Hospital Association's chief executive, Richard Umbdenstock, said in a statement that "the goal of these new care arrangements is to produce real benefits and improve quality for patients" and that "there is plenty of federal and state oversight to ensure just that."
William F. Jessee, chief executive of the medical group association—which has 21,500 members, who are typically managers of medical groups—said he expected to see "more physicians selling out to hospitals." The survey included 2,348 practices both among the association's own members and outside and was conducted in January, February and March. The association warns that the survey wasn't focused on pinning down exact ownership numbers.
For their part, hospitals often aim to guarantee revenue. The surgeries and other care that employed doctors perform or order up will generate billing for that hospital, while independent physicians may be affiliated with multiple hospitals. "They want to essentially lock in volume, inpatient and outpatient," said Paul Mango, a director at consulting firm McKinsey & Co.
St. Luke's Hospital in Duluth, Minn., bought a local primary-care practice two years ago. It hired 20 doctors this year and is now planning to add more in the next two years, while searching for an additional 27 in specialties. "You need patients to support your facilities, and doctors bring patients," said John Strange, chief executive of the not-for-profit hospital, which has 267 beds and currently employs around 180 doctors.
Adding to the incentive, some procedures are paid more richly if done in a hospital than in a doctor-owned clinic. If doctors are employed by hospitals, this extra money can be figured indirectly into their compensation. Under anti-kickback laws, they still can't be rewarded directly for ordering services such as imaging tests that are lucrative for the hospital but may not be needed.
The latest sign of the continued shift comes from a large Medical Group Management Association survey, which found that the share of responding practices that were hospital-owned last year hit 55%, up from 50% in 2008 and around 30% five years earlier.
The biggest U.S. physician-recruiting firm, Merritt Hawkins, a unit of AMN Healthcare Inc., said the share of its doctor searches that were for positions with hospitals hit 51% for the 12 months ended in March, up from 45% a year earlier and 19% five years ago. The number of searches for physician groups and partnerships has dropped.
The trend is tied to the needs of both doctors and hospitals, as well as to emerging changes in how insurers and government programs pay for care. Many doctors have become frustrated with the duties involved in practice ownership, including wrangling with insurers, dunning patients for their out-of-pocket fees and acquiring new technology. Some young physicians are choosing to avoid such issues altogether and seeking the sometimes more regular hours of salaried positions.
Attila Barabas, a urologist who completed his residency in 2006 and then worked briefly in a group practice, is now working for a hospital in New Hampshire and next year will move to a hospital in Wyoming to be closer to family. As an employed physician, "I can really focus only on practicing medicine, which is nice," he said. "I don't have to worry about the business side of the operation."
Hospitals are also seeking to position themselves for new methods of payment, including an emerging model known as accountable-care organizations that is encouraged by the new federal health care law. These entities are supposed to save money and improve quality by better integrating patients'care, with the health-care provider sharing in the financial benefits of new efficiencies.
The consolidation wave is raising red flags among some regulators, researchers and health insurers, who warn that bigger health systems can use their leverage to push for higher rates. "We've always been concerned about combinations that are being done to increase prices," said Karen Ignagni, chief executive of America's Health Insurance Plans.
The American Hospital Association's chief executive, Richard Umbdenstock, said in a statement that "the goal of these new care arrangements is to produce real benefits and improve quality for patients" and that "there is plenty of federal and state oversight to ensure just that."William F. Jessee, chief executive of the medical group association—which has 21,500 members, who are typically managers of medical groups—said he expected to see "more physicians selling out to hospitals." The survey included 2,348 practices both among the association's own members and outside and was conducted in January, February and March. The association warns that the survey wasn't focused on pinning down exact ownership numbers.
For their part, hospitals often aim to guarantee revenue. The surgeries and other care that employed doctors perform or order up will generate billing for that hospital, while independent physicians may be affiliated with multiple hospitals. "They want to essentially lock in volume, inpatient and outpatient," said Paul Mango, a director at consulting firm McKinsey & Co.
St. Luke's Hospital in Duluth, Minn., bought a local primary-care practice two years ago. It hired 20 doctors this year and is now planning to add more in the next two years, while searching for an additional 27 in specialties. "You need patients to support your facilities, and doctors bring patients," said John Strange, chief executive of the not-for-profit hospital, which has 267 beds and currently employs around 180 doctors.
Adding to the incentive, some procedures are paid more richly if done in a hospital than in a doctor-owned clinic. If doctors are employed by hospitals, this extra money can be figured indirectly into their compensation. Under anti-kickback laws, they still can't be rewarded directly for ordering services such as imaging tests that are lucrative for the hospital but may not be needed.
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