Hospitals are hiring physicians in larger numbers and across broader specialties than ever before. According to the American Hospital Association, hospitals employed roughly 211,500 physicians in 2010, up 34 percent since 2000. In total, 25 percent of all active physicians are currently employed by hospitals.
Why are hospitals employing more specialists?
The reason for this surge in hospital employment can be traced to two root causes, according to Akram Boutros, MD, president of BusinessFirst Healthcare Solutions: the current healthcare economy and healthcare reform. "Hospitals feel pressured to protect or increase market share by expanding high-revenue specialty physicians and physicians whose practices are geared toward commercial and surgical patients," Dr. Boutros says.
According to Dr. Boutros, physicians turn to hospital employment as reimbursements decrease. "Physicians, especially those in specialties like orthopedics, cardiology and surgery, have been financially impacted by declining professional fees, the exclusion and reduction of ancillary services fees and declining volumes in procedures such as angioplasties," he says.
In 2009, for example, CMS reduced the relative value units assigned to specific cardiology-related procedures. "The cuts ranged from between 10 percent to 40 percent, depending on the procedure, with nuclear imaging witnessing a 41 percent decline in reimbursement," says Dr. Boutros. Most commercial insurers followed suit in 2010. In a two-year period, physician fees for cardiac catheterization decreased from an average of $800 to $250 per procedure, and laboratory testing fee have diminished by 21 percent.
Physicians feel that looming changes in healthcare create the need for hospital "protection." Further fee erosion, a heightened focus on the quality of care, and the possibility of being excluded from an accountable care program are all very relevant concerns for many physicians, Dr. Boutros says.
Which specialists are impacted by hospital employment?
The hospital employment outlook differs markedly among specialties, physicians say. Procedure type and volume, reimbursements, the desire for independence and the ability to form large multi-specialty groups all play a role in determining which specialists are more and less likely to become hospital employees.
ENT
Some specialties, including ENT, are less prone to the hospital employment trend because of the tendency for these physicians to aggregate under large specialty-focused multi-state groups, says Dr. Boutros. "Allergy and ENT Associates [in Tarrytown, N.Y.], for example, have more than 125 physicians across [New York and New Jersey] and offer specialty services including head and neck surgery, asthma care and sleep centers," he says.
Larger groups are less vulnerable to the issues plaguing ENT physicians, such as the fact that ENT does not have the reimbursement power of specialties like spine or orthopedics, says Dr. Boutros. If a physician group can bring in a large volume of patients, the reimbursement issue can be successfully combated, and the group can continue to function independently.
Gastroenterology
Gastroenterology has experienced an upswing in hospital employment in recent years, according to Sri Komanduri, MD, a gastroenterologist with Northwestern Memorial Hospital in Chicago. "I think the pendulum is swinging toward where it's more beneficial to work with the hospital, which may take administrative costs like maintenance, cleaning, compliance with regulatory organizations, all out of the physician's direct hands," says Dr. Komanduri. "It's less of a headache than a cost relief. Those are the sorts of advantages that a hospital could use to bargain with physician groups, giving them an incentive to become employees."
Gastroenterologists may also tend to gravitate toward hospitals because more endoscopies are being performed there, says Dr. Komanduri. "The majority of what we do is procedurally based, and everyone is pushing for that to be done on the hospital format," he says.
Dr. Komanduri predicts that gastroenterologists who do not want to become employed by hospitals will start to combine their practices into large multi-specialty groups. "That's ultimately what would happen if a hospital buys out those groups anyway," he says.
Ophthalmology
Ophthalmologists are among the most independent specialists, according to Larry Patterson, MD, medical director of Eye Centers of Tennessee and the Cataract and Laser Center in Crossville, Tenn. "I think we're nearly the last specialty to be affected by hospital employment," he says. "Seventy percent of cataract surgeries now done in ASCs, and you hear hospitals complaining that they don't make money off of cataract surgery anyway."
The most efficient ophthalmological practice arrangement consists of several physicians who work as a cohesive group, Dr. Patterson says. "Small, nimble practices work very well," he says, "There have been studies done that say once you have more than nine ophthalmologists in a group, income decreases and the practice becomes less efficient."
Hospitals and ophthalmologists, meanwhile, do not seem to have a strong practical need for one another, he says. "I don't ever have patients in the hospital, and I can go years without having to enter a hospital," Dr. Patterson says. "A lot of us have gotten off of hospital staffs because it became too difficult to provide services and be on call when, in reality, we don't need the hospital. We're in the clinics and surgery centers."
Orthopedics
In an increasingly vulnerable healthcare environment, the stability of a consistent salary and a guaranteed referral base can be alluring for orthopedic surgeons. "The one thing that I envy about my colleagues who have joined hospitals is that they walk right into a referral base," says Ashraf Darwish, MD, an orthopedic surgeon at Oak Orthopedics in Bradley, Ill. "If a hospital has 35 primary care doctors and you're the orthopedic surgeon on staff, you automatically get those referrals. And at a hospital, you know exactly how much money you're going to make, and the salary is always the same. In private practice, it's your job to market yourself and make people come to you."
The desire for independence and control over scheduling and case volume, however, can be a strong influence in an orthopedic surgeon's decision to stay in private practice. "Many of us have a fear that we may lose some of our autonomy by joining a hospital groups, and it's a well-founded concern," says Dr. Darwish. "I've definitely seen the trend towards hospital employment in my five years of residency — senior residents end up being employed by hospitals or multi-specialty groups. But then you'll hear about someone who joined a hospital and their salary was cut in half two or three years later, or they're asked to do something they weren't asked to do in the initial contract."
The prospect of tailoring the schedule and caseload of a private practice —as opposed to being assigned work by a hospital — continues to appeal to orthopedists. "I can limit my practice and it may decrease the amount of work I do, as opposed to working for a hospital that would dictate the amount of work for me," says Dr. Darwish. "The only person I have to answer to in private practice is me."
Pain management
Anesthesia and pain management are affected "tremendously" by the hospital employment trend, according to Robert S. Bray, Jr., MD, neurosurgeon and CEO of DISC Sports & Spine Center in Marina del Rey, Calif. "It's becoming a difficult topic because hospitals are cutting contracts with anesthesia groups and restricting the entire hospital to that group," he says. "Many outside anesthesiologists can't get on hospital staffs because they all have structures exclusive to a group."
Consequently, pain management physicians find that they have fewer options for obtaining credentials and staff positions. "Where do they go? How [do they] get credentialed?" says Dr. Bray. "They have to be credentialed in a Joint Commission approved facility, but they can't get on a staff anywhere because hospitals have begun excluding outside physicians from staff privileges if they are not part of their group."
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Why are hospitals employing more specialists?
The reason for this surge in hospital employment can be traced to two root causes, according to Akram Boutros, MD, president of BusinessFirst Healthcare Solutions: the current healthcare economy and healthcare reform. "Hospitals feel pressured to protect or increase market share by expanding high-revenue specialty physicians and physicians whose practices are geared toward commercial and surgical patients," Dr. Boutros says.
According to Dr. Boutros, physicians turn to hospital employment as reimbursements decrease. "Physicians, especially those in specialties like orthopedics, cardiology and surgery, have been financially impacted by declining professional fees, the exclusion and reduction of ancillary services fees and declining volumes in procedures such as angioplasties," he says.
In 2009, for example, CMS reduced the relative value units assigned to specific cardiology-related procedures. "The cuts ranged from between 10 percent to 40 percent, depending on the procedure, with nuclear imaging witnessing a 41 percent decline in reimbursement," says Dr. Boutros. Most commercial insurers followed suit in 2010. In a two-year period, physician fees for cardiac catheterization decreased from an average of $800 to $250 per procedure, and laboratory testing fee have diminished by 21 percent.
Physicians feel that looming changes in healthcare create the need for hospital "protection." Further fee erosion, a heightened focus on the quality of care, and the possibility of being excluded from an accountable care program are all very relevant concerns for many physicians, Dr. Boutros says.
Which specialists are impacted by hospital employment?
The hospital employment outlook differs markedly among specialties, physicians say. Procedure type and volume, reimbursements, the desire for independence and the ability to form large multi-specialty groups all play a role in determining which specialists are more and less likely to become hospital employees.
ENT
Some specialties, including ENT, are less prone to the hospital employment trend because of the tendency for these physicians to aggregate under large specialty-focused multi-state groups, says Dr. Boutros. "Allergy and ENT Associates [in Tarrytown, N.Y.], for example, have more than 125 physicians across [New York and New Jersey] and offer specialty services including head and neck surgery, asthma care and sleep centers," he says.
Larger groups are less vulnerable to the issues plaguing ENT physicians, such as the fact that ENT does not have the reimbursement power of specialties like spine or orthopedics, says Dr. Boutros. If a physician group can bring in a large volume of patients, the reimbursement issue can be successfully combated, and the group can continue to function independently.
Gastroenterology
Gastroenterology has experienced an upswing in hospital employment in recent years, according to Sri Komanduri, MD, a gastroenterologist with Northwestern Memorial Hospital in Chicago. "I think the pendulum is swinging toward where it's more beneficial to work with the hospital, which may take administrative costs like maintenance, cleaning, compliance with regulatory organizations, all out of the physician's direct hands," says Dr. Komanduri. "It's less of a headache than a cost relief. Those are the sorts of advantages that a hospital could use to bargain with physician groups, giving them an incentive to become employees."
Gastroenterologists may also tend to gravitate toward hospitals because more endoscopies are being performed there, says Dr. Komanduri. "The majority of what we do is procedurally based, and everyone is pushing for that to be done on the hospital format," he says.
Dr. Komanduri predicts that gastroenterologists who do not want to become employed by hospitals will start to combine their practices into large multi-specialty groups. "That's ultimately what would happen if a hospital buys out those groups anyway," he says.
Ophthalmology
Ophthalmologists are among the most independent specialists, according to Larry Patterson, MD, medical director of Eye Centers of Tennessee and the Cataract and Laser Center in Crossville, Tenn. "I think we're nearly the last specialty to be affected by hospital employment," he says. "Seventy percent of cataract surgeries now done in ASCs, and you hear hospitals complaining that they don't make money off of cataract surgery anyway."
The most efficient ophthalmological practice arrangement consists of several physicians who work as a cohesive group, Dr. Patterson says. "Small, nimble practices work very well," he says, "There have been studies done that say once you have more than nine ophthalmologists in a group, income decreases and the practice becomes less efficient."
Hospitals and ophthalmologists, meanwhile, do not seem to have a strong practical need for one another, he says. "I don't ever have patients in the hospital, and I can go years without having to enter a hospital," Dr. Patterson says. "A lot of us have gotten off of hospital staffs because it became too difficult to provide services and be on call when, in reality, we don't need the hospital. We're in the clinics and surgery centers."
Orthopedics
In an increasingly vulnerable healthcare environment, the stability of a consistent salary and a guaranteed referral base can be alluring for orthopedic surgeons. "The one thing that I envy about my colleagues who have joined hospitals is that they walk right into a referral base," says Ashraf Darwish, MD, an orthopedic surgeon at Oak Orthopedics in Bradley, Ill. "If a hospital has 35 primary care doctors and you're the orthopedic surgeon on staff, you automatically get those referrals. And at a hospital, you know exactly how much money you're going to make, and the salary is always the same. In private practice, it's your job to market yourself and make people come to you."
The desire for independence and control over scheduling and case volume, however, can be a strong influence in an orthopedic surgeon's decision to stay in private practice. "Many of us have a fear that we may lose some of our autonomy by joining a hospital groups, and it's a well-founded concern," says Dr. Darwish. "I've definitely seen the trend towards hospital employment in my five years of residency — senior residents end up being employed by hospitals or multi-specialty groups. But then you'll hear about someone who joined a hospital and their salary was cut in half two or three years later, or they're asked to do something they weren't asked to do in the initial contract."
The prospect of tailoring the schedule and caseload of a private practice —as opposed to being assigned work by a hospital — continues to appeal to orthopedists. "I can limit my practice and it may decrease the amount of work I do, as opposed to working for a hospital that would dictate the amount of work for me," says Dr. Darwish. "The only person I have to answer to in private practice is me."
Pain management
Anesthesia and pain management are affected "tremendously" by the hospital employment trend, according to Robert S. Bray, Jr., MD, neurosurgeon and CEO of DISC Sports & Spine Center in Marina del Rey, Calif. "It's becoming a difficult topic because hospitals are cutting contracts with anesthesia groups and restricting the entire hospital to that group," he says. "Many outside anesthesiologists can't get on hospital staffs because they all have structures exclusive to a group."
Consequently, pain management physicians find that they have fewer options for obtaining credentials and staff positions. "Where do they go? How [do they] get credentialed?" says Dr. Bray. "They have to be credentialed in a Joint Commission approved facility, but they can't get on a staff anywhere because hospitals have begun excluding outside physicians from staff privileges if they are not part of their group."
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