The Hospital: Your Best Frenemy?

March 26, 2013

Hospitals have quickly become physicians' dominant employer. Does independent practice have a future?

Is anyone willing to believe that independent medical practice isn’t absolutely destined for the trash bin of history? Is it possible that there remains (and will remain) a role for practices that are not wholly owned subsidiaries of the Acme Hospital Corporation of North America?

Or is it just over?

I’ve been talking to a lot of smart people about this issue recently, and I’ve come away mildly encouraged that a modern independent practice that uses technology to aid the clinical work flow and monitor its revenue cycle can survive, and even thrive.  

Don’t misunderstand me. The trend toward large health systems, often hospital-led, is not going to reverse itself. Anyone expecting healthcare consolidation to unravel the way it did in the 1990s is kidding himself.

I get that. But then I talk to someone like Allan Gee, who tells me that his solo neurology practice in Cody, Wyo., is doing fine, thanks. A lot of physicians in his part of the country, like elsewhere, are going the hospital-employment route, but he doesn’t need to work for the hospital. And he’s not interested.

“There seems to be a pattern of physician dissatisfaction once they become employed,” Gee said. “They’re often squeezed into using a technology infrastructure that may not work for their work flow. And they’re asked to practice in ways that they hadn’t intended. I just had a conversation with one of the employed physicians the other day, and he was concerned because his hospital is going to a work RVU-based salary system, which will decrease his income by 50 percent or more, he said.”

For many physicians, though, employment seems safer. Working for half the money for a hospital does not sound like a great deal to me, but if that feels safer to you then the business risks inherent in independent practice, then OK, I guess it’s safer. For some, employment seems easier. Just give them a 9-to-5 job and a paycheck. I appreciate the impulse but it doesn’t always pan out that way. Tommy Bohannon, a divisional vice president with physician recruiting firm Merritt Hawkins, told me that it’s not uncommon for independent docs to become disillusioned after switching to hospital employment.

“A lot of people feel like they went from the frying pan into the fire,” he said. “One of the most common complaints is that they feel like they have responsibility without authority.”  The next generation of physicians, many of whom have never known independent practice, may be less prone to such disenchantment, Bohannon suggests.

In any case, few physicians seem enthusiastic about hospital employment, including the ones who are currently employed. Last year Merritt Hawkins, in a survey of some 13,000 physicians, asked whether they thought the physician-hospital employment movement was a “positive trend likely to enhance quality of care and decrease costs.” The survey found that 62 percent of hospital-employed physicians disagreed with that statement. (It was closer to 90 percent among the private-practice docs.)

I'm not trying to say you should not become employed, necessarily. For some, it is the right decision. But I am suggesting that you may have more options than you know, and more leverage. I just got back from HIMSS, a major health IT trade show, where several vendors told me they’re trying to help independent practices stay that way. For example, Jonathan Bush, the CEO of athenahealth, said his company already offers to smaller practices the kind of technical infrastructure they need to survive in this environment (Allan Gee is a happy customer), and says what’s needed next is an “independent risk manager” that practices can “plug into” to gain the benefits of an ACO without crawling to the hospital. The only hurdle, Bush told me, is permission from CMS for companies like his to act as a “meta ACO” on their clients’ behalf, “and we’re down in Washington knocking on doors and having long wonky discussions” to try to secure that permission. Other vendors have similar efforts underway. More on those in future posts.

In the meantime, I’m wondering how you are feeling right now about hospitals. Are they your partners, your competitors, your mortal enemies? If you're employed by a hospital, how do you like it? Independent docs, are you thinking of becoming employed? Do you think you can avoid it?