Hospital Physician Alignments are Tenuous

integration1Hospitals, particularly those heading ACO development efforts, are quick to say things like “One day, all physicians will be employed by hospitals.”  Though there is clearly some wisdom under that statement, it’s also a remarkable leap of faith.

Three things are clear in this era of healthcare reform:  (1) healthcare will be provided to more, but with less; (2) there will be a growing move over time to pass financial risk to providers; and (3) those businesses in a position to control both costs and quality (and some say patient satisfaction) are in a position to both survive and even do better than ever.

This leaves the door wide open as to the form of the business that can succeed.  Is it a single specialty mega practice?  Is it a multi specialty medical practice?  How about a hospital?

It’s definitely possible for a hospital to lead the charge, but there are key challenges with that proposition, like:

●Hospitals aren’t exactly known for being low cost providers

●They aren’t popular places in terms of wellness or prevention

●They tend to be edifice-centric instead of market centric

●They haven’t demonstrated a talent for constructing enjoyable and financially aligned collaborations with physicians

The key word here, in terms of physician/hospital relationships, especially into the future, is “aligned.”  Any physician/hospital endeavor has to ensure that both parties are on the same page.

Hospitals that become low cost providers have something to offer to “partnered” physicians, shared cost savings.  By definition, wellness and prevention will have to play a role over time in order for physician/hospital collaborations to bear fruit (e.g. “shared cost savings”).  Being focused only on filling beds in a hospital is a sure way for a hospital/physician collaboration to lose.  Physicians focus on covering a geographic area.  Hospitals need to understand and support that, or they both stand to lose.  At the end of the day, if physicians and hospitals cannot construct and achieve viable financial models that align them and reward them financially, the only thing hospitals will have achieved is lots of employees and lots of overhead.

Physicians looking at a hospital collaboration have to make sure it makes good sense!  They have to be willing to explore tough issues like—

●What long range plan does the hospital have?  Do they even have one?

●Does it seem designed to better manage costs and quality?

●Is there a role for the doctor to help the hospital achieve that and share in the financial benefits of it?

●Does the hospital understand and accept what made the physician’s practice successful and will they agree to continue to support it, even if the physician becomes employed?

Key indicators that a hospital may not be on the same page as a physician “partner” include:

●A lack of transparency (e.g. they won’t show you their data)

●“Loyalty” requirements that will actually hurt the physician practice (e.g. only being on staff at the employer/hospital or only covering their ER)

●No primary care physicians employed

●No financial models in place that help BOTH the hospital and physician for achieving established goals

Hospitals have a very tough challenge as healthcare delivery evolves to provide more with less.  As the highest cost provider in the healthcare chain, they are probably the most vulnerable and have the most to lose.  They could be a good partner, but physicians have to be very diligent in examining opportunities to join them.

Free Sample Medical Director’s Agreement HERE

5 thoughts on “Hospital Physician Alignments are Tenuous

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