Why Hospitals Are Employing Doctors

Why are more doctors giving up private practice and seeking instead to become hospital employees?

This article in the 2/26/2012 Pittsburgh Tribune-Review discusses why, "Hospitals woo physicians away from private practices".

From the physician's point of view:

...[S]ome physicians tire of running a business and sell their practices to a hospital system for "the sigh of relief that they can just take care of patients," said Dr. Leo McCafferty, president of the Allegheny County Medical Society and a Shadyside plastic surgeon with an independent practice.

Being employed by a hospital can be good when government mandates make remaining in private practice more difficult.

A hospital offers a consistent paycheck even when government reimbursements for Medicare and Medicaid are cut back, experts say. Billing and negotiating with insurance companies is complicated. And health systems have the money to invest in electronic record systems, which the government mandates.

"It's difficult for solo doctors and smaller groups to incur the expense of creating infrastructure to meet the goals of the government," [Dr. Frank] Civitarese said.

Yet from the hospital's perspective, physicians are still a cash cow:

Each doctor can bring millions of dollars annually to a health system, according to a 2010 study by Merritt Hawkins, a physician search and consulting company in Irving, Texas.

On the low end, a pediatrician can generate more than $850,000 a year for a hospital while earning a salary of $171,000, the study shows. On the high end, a neurosurgeon can be worth more than $2.8 million in hospital revenue while earning $571,000 a year. In the middle are family practice doctors, which earn $173,000 on average but can generate more than $1.6 million a year for a health system.

(Read the full text of "Hospitals woo physicians away from private practices".)

Of course, hospital-employed physicians are generally expected to keep their patient within the system that employs them, which may or may not necessarily be in the patient's best medical interest.

Hospital-employed physicians thus serve two masters -- their patient and their employer. This has the potential to create conflicts of interests for physicians (depending on the exact terms of their employment contract). Whether this will ultimately compromise patient care remains to be seen.

(Link via Donna Rovito.)