Even with the best of intentions, hospitals may lose out when it comes to employment ventures with physicians, at least in the short-term: Hospitals lose an average of $150,000 to $250,000 per year during the first three years of employing a physician, according to a study in the New England Journal of Medicine.
"[H]iring physicians is not always a winning proposition in the short-term," Kevin Murphy, treasurer and executive vice president of network and business development at Eastern Connecticut Medical Professionals, said in a Hartford Business Journal Online article.
Eastern Connecticut Medical Professionals lost $4.2 million in 2010, when it operated physician office practices and a hospitalist program for the Eastern Connecticut Health Network. The 100-physician practice's operating budget soared from $3 million a decade ago to $28 million today.
Despite the financial risks involved, there are long-term benefits that make financial sense to many hospitals, according to the article. Hospitals can gain patient referrals under the employment model as a steady stream of business.
But it's the uncertainty around healthcare reform that has many hospitals and physician practices racing to partnering relationships. More than two-thirds (67 percent) of hospitals and health systems are seeing more requests from independent physician groups about employment, most likely because of healthcare reform, according to a recent MedSynergies Inc. and HealthLeaders Media report.
And nearly a third (32 percent) of first-year residents say they prefer to be employed by a hospital, according to a Merritt Hawkins & Associates survey.
Hospitals can offer a competitive edge to supporting physician practices, according to an Outer Banks Voice article.
"In our area, 70 percent of the patients are either Medicare, Medicaid or self-pay, which often means ‘no pay.' This makes it harder for young doctors to practice in this area and make a profit," Sharon Tanner, president of Albemarle Hospital in North Carolina, said in the article.
"We step in with practice assistance or bringing them in as employees. As payment reimbursements are ratcheted down by the government and the insurance payers, there is less money to go around for hospitals and doctors. Many doctors decide they want to avoid the complexity of running the business side of a practice."
For more information:
- read the Hartford Business Journal Online article
- read the Outer Banks Voice article
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