Ron Seifert, vice president at the Hay Group in Philadelphia, explains why the trend toward physician employment in hospitals will continue, even though he is currently seeing a temporary slowdown in transactions.
Q: Is the wave of physician employment at hospitals cresting?
Ron Seifert: That is an interesting question. While my general sense is no, we are seeing the rate and volume of physicians joining hospitals slow a bit. This is probably transitory and volume will pick up soon.
Q: Why is it slowing down?
RS: It's difficult to know for sure, but it may have to do with the improving economy. At the beginning of the recession, physicians were hit very hard out of the box with a drop in patient volume and changes in reimbursement. They had a terrible time in 2009. Last year was a little better and there will be continued improvement in 2011. There is a delay in seeing these changes because the physician-hospital courting process takes a while, especially for large group practices.
Q: As the economy improves, could it be that physicians don't feel as desperate any more and want to spend more time evaluating hospital employment?
RS: That could be true. They could feel they have more time to explore their options. Many employed physicians moved very fast into hospital arrangements before.
Q: Could it also be that the physicians who wanted to join hospitals have already done so? Has the trend to hospital employment played itself out?
RS: No, I do not believe that is true. There are many physicians waiting to come forward, whether it involves joining a hospital or a large group practice. This trend is more than just about the economy. It's about fundamental changes in the healthcare system.
Q: What sort of changes are you referring to?
RS: Changes in reimbursement, technology and patient care. Take the phenomenon of the accountable care organization and related payment arrangements. There is a new paradigm that will likely involve bundled payments, risk sharing and capitated payment structures. Physicians will have to work closely with hospitals and payors. Physicians and hospitals need each other more than ever.
Q: Would repeal of the healthcare reform law, which includes ACOs, stop this trend?
RS: No. Regardless of what happens to healthcare reform, the trend I am talking about will continue. While some parts of reform may be repealed, ACOs and related concepts will stand. Private payors are already initiating their own versions of ACOs.
Q: How could a hospital screw things up and drive employed physicians away?
RS: By making them feel like employed staff, without a voice in governance and the direction of the institution. Physicians are critical to solving challenges within healthcare, so they need to be made part of the solution. Many hospitals realize this and are putting physicians in a more prominent role. A number of organizations have created shared governance structures and talk about principles of decision-making. They work with physicians to identify and articulate shared expectations.
Q: What do physicians have to do to make the relationship work?
RS: They will have to learn about management, reimbursement and business processes. They will have to be willing to work within the organization and leverage the strength of teams.
Q: Are physicians really ready for a large organization? It's one thing to be a team player in the OR and quite another to be a team player in a hospital system.
RS: Most physicians entered the profession to practice their craft. They really want to treat patients but they face a lot of distractions in private practice, what with changing work demands and the need for more capital. Their chief role in hospital employment would again be clinical care. We're also finding that many younger physicians really want to be part of an institution, whether it is a hospital or a large group practice. This is a lifestyle issue and not at all gender-specific.
Q: Will some older physicians still shun a large organization?
RS: I do see a generational difference. The more seasoned physicians grew up under a different paradigm. Many of them tend to be more entrepreneurial and want to run their own practice. They seem to have a different notion of what it means to be experts in their field. They also remember the HMOs of 15 or 20 years ago, which makes them feel a bit wary about the future.
Q: How would independent physicians fit into the new paradigm?
RS: There will always be a place for good clinicians. The question is how will hospitals, group practices and private payors work with them. There would have to some kind of a place for solo practitioners in a risk-sharing or capitated environment.
Learn more about the Hay Group.
Q: Is the wave of physician employment at hospitals cresting?
Ron Seifert: That is an interesting question. While my general sense is no, we are seeing the rate and volume of physicians joining hospitals slow a bit. This is probably transitory and volume will pick up soon.
Q: Why is it slowing down?
RS: It's difficult to know for sure, but it may have to do with the improving economy. At the beginning of the recession, physicians were hit very hard out of the box with a drop in patient volume and changes in reimbursement. They had a terrible time in 2009. Last year was a little better and there will be continued improvement in 2011. There is a delay in seeing these changes because the physician-hospital courting process takes a while, especially for large group practices.
Q: As the economy improves, could it be that physicians don't feel as desperate any more and want to spend more time evaluating hospital employment?
RS: That could be true. They could feel they have more time to explore their options. Many employed physicians moved very fast into hospital arrangements before.
Q: Could it also be that the physicians who wanted to join hospitals have already done so? Has the trend to hospital employment played itself out?
RS: No, I do not believe that is true. There are many physicians waiting to come forward, whether it involves joining a hospital or a large group practice. This trend is more than just about the economy. It's about fundamental changes in the healthcare system.
Q: What sort of changes are you referring to?
RS: Changes in reimbursement, technology and patient care. Take the phenomenon of the accountable care organization and related payment arrangements. There is a new paradigm that will likely involve bundled payments, risk sharing and capitated payment structures. Physicians will have to work closely with hospitals and payors. Physicians and hospitals need each other more than ever.
Q: Would repeal of the healthcare reform law, which includes ACOs, stop this trend?
RS: No. Regardless of what happens to healthcare reform, the trend I am talking about will continue. While some parts of reform may be repealed, ACOs and related concepts will stand. Private payors are already initiating their own versions of ACOs.
Q: How could a hospital screw things up and drive employed physicians away?
RS: By making them feel like employed staff, without a voice in governance and the direction of the institution. Physicians are critical to solving challenges within healthcare, so they need to be made part of the solution. Many hospitals realize this and are putting physicians in a more prominent role. A number of organizations have created shared governance structures and talk about principles of decision-making. They work with physicians to identify and articulate shared expectations.
Q: What do physicians have to do to make the relationship work?
RS: They will have to learn about management, reimbursement and business processes. They will have to be willing to work within the organization and leverage the strength of teams.
Q: Are physicians really ready for a large organization? It's one thing to be a team player in the OR and quite another to be a team player in a hospital system.
RS: Most physicians entered the profession to practice their craft. They really want to treat patients but they face a lot of distractions in private practice, what with changing work demands and the need for more capital. Their chief role in hospital employment would again be clinical care. We're also finding that many younger physicians really want to be part of an institution, whether it is a hospital or a large group practice. This is a lifestyle issue and not at all gender-specific.
Q: Will some older physicians still shun a large organization?
RS: I do see a generational difference. The more seasoned physicians grew up under a different paradigm. Many of them tend to be more entrepreneurial and want to run their own practice. They seem to have a different notion of what it means to be experts in their field. They also remember the HMOs of 15 or 20 years ago, which makes them feel a bit wary about the future.
Q: How would independent physicians fit into the new paradigm?
RS: There will always be a place for good clinicians. The question is how will hospitals, group practices and private payors work with them. There would have to some kind of a place for solo practitioners in a risk-sharing or capitated environment.
Learn more about the Hay Group.