Physicians and Hospitals Increasingly Joining Forces

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The Business of Medicine

EDITOR’S NOTE: I was fortunate to have practiced my specialty of general and vascular surgery in an era in which an individual physician had a very good chance of success in a private practice setting by providing top quality service to his/her patients and referring base of physician colleagues.  However, the complexities of the business environment and structural landscape of medical practices today challenge physician-owned practices, and physicians are increasingly turning to hospitals and integrated healthcare systems for solutions to address the strains of  the recession, Medicare and Medicaid cuts and a rapidly evolving regulatory climate.  

With the promise of more economic stability, reduced hours and therefore better quality of life, more resources and the ability to devote more time to patient care, the number of new physicians joining hospital-owned practices across the country now exceeds the number of first-year practitioners who go to work for medical groups owned and operated by physicians. 

This proclivity for ever-increasing hospital system-owned physicians is evident here at home with HMA/Wuesthoff  adding on to their employed physician group by bringing Osler into their system last year, and Health First continuing to expand their over 120-member physician group.  

The new models of care, which are focused on quality, safety, effectiveness, efficiency and the ability to optimally manage populations over a continuum, require tightly integrated and aligned relationships between physicians and hospitals.  Physicians and healthcare systems working closely together with shared organizational strategies, goals and incentives should be mutually beneficial to patients and providers, and improve healthcare in our community.

WASHINGTON, D.C.–Fifteen years ago, I proudly hung a sign outside my office with my name followed by “MD.”  I had started my own business. A small private medical practice is much like a mom-and-pop store, where the doctor has the autonomy to decide the hours, which insurance to accept, which patients to see and how much to charge.

Over the years, my practice has grown, and now I have several doctors working along with me. But I may be an endangered species. Across the nation hospitals are purchasing physician practices at an extraordinary pace. In part, it’s due to complexities in managing chronically ill patients, but mostly it’s due to the way doctors and hospitals are being paid for their
services.

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