Logan Reid
Hospitals and health systems are increasingly hiring physicians as employees, with over 25% of US physicians practicing in groups owned by hospitals and another 7% as direct employees. This shift is driven by economic factors, as hospitals seek new revenue streams and physicians seek the security of salaried positions in a changing healthcare market. Hospitalists, or physicians who work directly for hospitals, can reduce costs and length of stay, improve quality of care, and increase patient referrals within the hospital system. Despite potential benefits, complications can arise in the employment relationship between hospitals and physicians, including challenges related to hiring and firing processes.
| Characteristics | Values |
|---|---|
| To generate revenue | Hospital boards and administrators need physicians to admit and attend to patients to generate revenue. |
| To reduce costs | Hospitalists can reduce hospital costs by up to 20%. |
| To reduce patient length of stay | Hospitalists can reduce the length of patient stays by up to 30%. |
| To improve patient care | Hospitalists help ensure documents are completed on time, improving communication with patients' outside caregivers. |
| To attract more patients | Employed physicians are more likely to refer patients to the hospital system. |
| To provide a salary to physicians | Physicians are moving to salaried jobs with hospitals due to changes in the healthcare market. |
| To provide accountability | Current national policies encourage physicians and hospitals to organize to provide accountability. |
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What You'll Learn
- Hospitals need physicians to admit and treat patients, generating revenue
- Employed physicians are members of medical staff, subject to review
- Hospitals seek a return on investment in physician enterprises
- Doctors seek salaried jobs with hospitals due to healthcare market concerns
- Hospitals offer salaries to move away from fee-for-service payments and reduce costs
Hospitals need physicians to admit and treat patients, generating revenue
Hospitals require physicians to admit and treat patients, which in turn generates revenue. This is a key reason why hospitals hire physicians. While hospital boards and CEOs need to make money for the hospital to function, they are not licensed to practice medicine, and therefore they need physicians to admit and treat patients.
The Society of Hospital Medicine has found that hospitalists, or physicians who work on staff at hospitals, can reduce hospital costs by up to 20%. A study in the New England Journal of Medicine estimated that patients treated by hospitalists were discharged about half a day earlier than those treated by their primary care physician. This means that hospitals can treat more patients without increasing bed capacity.
Hospitalists are also able to ensure that discharge documents are completed on time, which helps the discharge team communicate with patients' outside caregivers. This seamless communication is especially beneficial when patients are transitioning to primary care physicians within the same hospital system.
In addition, hospitals are looking for new revenue streams, and employing physicians directly is one way to achieve this. The traditional fee-for-service payment model, where private physicians are paid for each procedure and test, drives up the nation's healthcare bill. Employed physicians, on the other hand, are paid a salary, which can help to reduce excess spending and improve pricing.
According to Merritt Hawkins, a leading physician placement firm, there has been a significant increase in the number of hospital employment offers to physicians. This trend is driven by physicians seeking the benefits of a salaried position, such as the ability to focus on patient care without the hassles of hiring staff, billing, and running a practice.
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Employed physicians are members of medical staff, subject to review
Employed physicians are part of the medical staff and are subject to the same review processes as other medical staff members. According to the American Medical Association (AMA), employed physicians should be members of the medical staff of the hospitals or health systems with which they have contractual or financial arrangements. This means that they are subject to the bylaws, standards, rules, and regulations of the medical staff. The AMA's Principles for Physician Employment aim to address the ethical issues and public policy challenges surrounding physician employment.
Physicians who are employed by hospitals are still responsible for providing quality patient care and upholding professional standards. They are expected to apply for and be granted medical staff membership and privileges, meeting the same requirements as non-employed physicians. Hospitals may include allied health professionals, such as nurse practitioners and physician assistants, within the term "medical staff," but they are not legally required to do so.
The review process for employed physicians typically involves peer review, which is conducted by other physicians or medical staff members. This process evaluates the quality, appropriateness, medical necessity, and efficiency of patient care provided by the employed physician. It is designed to be confidential and independent of any human resources activities of the employer. The peer review information of employed physicians may be shared with their employer, while that of non-employed physicians is typically not.
In addition to peer review, employed physicians may also be subject to clinical case reviews or ongoing professional practice evaluations (OPPE) conducted by the organized medical staff within the hospital. These reviews ensure that the employed physician is meeting the same standards of care as any other physician. Hospitals and health systems have a legitimate interest in knowing about any clinical concerns or liabilities associated with their employed physicians.
Overall, the inclusion of employed physicians as members of the medical staff subject to review helps maintain the quality of patient care and upholds the ethical and professional standards of the medical profession.
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Hospitals seek a return on investment in physician enterprises
Hospitals, like any other business, need to make money to continue functioning. However, their boards and CEOs are not licensed to practice medicine, so they rely on physicians to admit and attend to patients and generate revenue. As such, hospitals have a vested interest in their physicians' performance and seek a return on their investment in these physician enterprises.
According to the American Medical Association, over 25% of US physicians practiced in groups wholly or partly owned by hospitals in 2016, and an additional 7% were direct hospital employees. This shift towards hospital employment offers several benefits to physicians, including the removal of the hassles of hiring staff, billing patients, and running a practice.
Despite the advantages, there are also challenges associated with physicians working for hospitals. Complications can arise during hiring and firing processes, and hospital boards and administrators cannot tell physicians how to practice medicine, even though the physicians are now employees of the hospital.
To ensure a return on their investment, hospital leaders should establish clear strategic goals and target returns on investment. This proactive approach to physician enterprises can help hospitals balance the need to generate revenue with providing quality patient care.
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Doctors seek salaried jobs with hospitals due to healthcare market concerns
The healthcare industry is evolving, and doctors are increasingly seeking salaried positions with hospitals, moving away from private practices. This shift is driven by concerns and changes in the healthcare market, and it is happening across various medical specialities.
Advantages of Salaried Positions in Hospitals
Doctors are attracted to salaried jobs in hospitals for several reasons. Firstly, they can benefit from attractive employment packages, often with higher incomes than in private practice. Hospitals are keen to employ physicians to form networks and take advantage of incentives under the Affordable Care Act. Additionally, Medicare reductions in set doctors' fees and aggressive insurers demanding lower rates from individual practices have made private practices less financially viable.
Secondly, doctors value the stability and security that come with salaried positions. With healthcare reforms and reimbursement uncertainties, many physicians are seeking the relative safety of hospital employment. They no longer need to worry about the business side of medicine, such as hiring staff, billing, and running a practice.
Thirdly, hospitals benefit from employing physicians by improving patient care and reducing costs. Hospitalists, or physicians who work on staff at hospitals, can reduce patients' length of stay, hospital costs, and improve the quality of care. This allows hospitals to treat more patients without increasing their bed capacity.
Potential Drawbacks and Challenges
While salaried positions in hospitals offer advantages, there are also potential drawbacks. One concern is the conflict between economic interests and patient welfare. Doctors on salary might be incentivized to order more tests and procedures to generate higher billing, which could increase costs without necessarily improving patient care.
Additionally, the shift towards salaried doctors may not always lead to cheaper healthcare. When a hospital buys a doctor's practice, the fees for certain procedures can increase due to the addition of a "facility fee."
In conclusion, doctors are seeking salaried jobs with hospitals due to concerns and changes in the healthcare market. While this trend offers benefits, such as improved patient care and financial security for physicians, it also presents challenges and potential conflicts of interest. As the healthcare industry continues to evolve, finding a balance between cost-efficiency and quality patient care remains a key focus.
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Hospitals offer salaries to move away from fee-for-service payments and reduce costs
Hospitals face a multitude of financial pressures, including rising costs, inadequate reimbursement, and policy-driven inefficiencies. These challenges threaten their ability to deliver high-quality, timely care and maintain essential services. To address these issues, hospitals have been hiring physicians as employees, moving away from the traditional independent practice model. This shift allows hospitals to generate revenue and better manage their financial resources.
One of the primary reasons for hospitals to hire physicians is to reduce costs and improve financial efficiency. By employing physicians directly, hospitals can negotiate salaries and move away from the fee-for-service (FFS) payment model, which has been criticized for incentivizing overutilization of services and driving up healthcare costs. In the FFS model, physicians are paid for each service they provide, which can lead to unnecessary treatments and procedures. Additionally, hospitals have struggled with inadequate reimbursement from Medicare and Medicaid, with underpayments amounting to billions of dollars annually.
The shift towards employing physicians offers hospitals more control over their costs. By offering competitive salaries, hospitals can attract and retain staff, ensuring a stable workforce. Additionally, employed physicians are less likely to be influenced by financial incentives when making treatment decisions, prioritizing patient welfare over economic interests. This aligns with the value-based care model, where hospitals are reimbursed based on patient satisfaction, reduced length of stay, and prevention of readmissions.
Furthermore, hospitals that employ physicians can benefit from improved care coordination and efficiency. Hospitalists, or physicians who work exclusively in hospitals, can reduce lengths of stay, contributing to cost savings and allowing hospitals to treat more patients without increasing bed capacity. This model enhances the quality of care and helps hospitals meet the requirements of value-based care initiatives, such as the Affordable Care Act and Medicare reforms.
While the trend of hospitals hiring physicians has been driven by financial considerations, it also offers advantages for physicians. Physicians who work for hospitals can focus on patient care without the administrative burdens of running an independent practice, including hiring staff, billing, and managing finances. However, this shift also raises ethical concerns, as hospitals must ensure that employment obligations do not interfere with medical professionalism and patient welfare remains the top priority.
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Frequently asked questions
A hospital system may re-hire a physician if they are in need of physicians to admit and attend to patients and thereby generate revenue.
Hospitalists can reduce lengths of stay by up to 30% and hospital costs by up to 20%. This would allow the hospital to treat more patients without increasing the number of beds available.
Physicians become hospital employees due to the benefits of having a salary and not having to deal with the hassles of hiring staff, billing patients, and running a practice.
Physicians are expensive, and hospital boards and administrators cannot tell physicians how to practice medicine.
