Many Hospitals Hiring Physicians To Increase Market Share, Revenue
Hospitals are hiring more physicians in an effort to increase market share and revenue, but the employment strategy does not guarantee clinical integration and might raise costs, according to a new study by the Center for Studying Health System Change, Modern Healthcare reports.
For the study, researchers conducted site visits in 12 nationally representative metropolitan communities and identified a rapid increase in hospital employment of physicians.
In recent years, community-based physicians have started to rely less on hospitals thanks to technological advancements that increased access to outpatient care, the researchers found. As a result, hospitals began to employ specialists to cover on-call duties and increase market share for major service lines, such as cardiac care.
Hospital consolidation also has started driving the trend of physician employment, according to the report, which suggests that physicians in highly concentrated markets may feel pressure to align with one local health system.
Many hospitals also have moved to hire primary care physicians to capture referrals from their specialists, the report found. Meanwhile, the report noted that physician employment is part of a larger hospital strategy to gain market share through increased admissions, diagnostic testing, and outpatient services.
According to the report, hospitals frequently are able to obtain more favorable health plan contracts when negotiating on behalf of their physicians, compared to physicians who negotiate on their own. In addition, physicians have become drawn to hospital employment because of stagnant reimbursement rates, the rising cost of private practice, and a need for a better work-life balance.
Employment Strategy Not Necessarily Linked to Clinical Integration
Although hospital-employed physicians could improve care by encouraging care continuum integration and facilitating communication across providers, the report noted that better alignment does not automatically result in such a structure.
According to the report, most clinical integration efforts are currently focused on single conditions. For example, many hospital CMOs say facilities are targeting "low-hanging fruit," like reducing readmissions among heart failure patients.
The report also suggested that communication among physicians continues to be a challenge, even if they are employed by the same hospital (Lee, Modern Healthcare, 8/18).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.