The downside to buying up physician practices

With more than 50 percent of hospitals planning to acquire a physician practice this year, I'd like to echo some recent words of caution: Hospital leaders must understand and be wary that physician practice acquisitions may yield unexpected consequences.

So warned Kent Bottles, M.D, a lecturer at the Thomas Jefferson University School of Population Health in Philadelphia, in a Hospital Impact blog post yesterday.

So, what's the downside of buying up physician practices?

Well for one thing, news coverage this week in FierceHealthFinance dispelled the common notion that hospital-physician integration equals savings. For example, the American College of Physician Executives surveyed 459 hospitals and health systems and found 32 percent saw costs rise after buying a medical group or practice. According to the poll, physician integration not only hurts patients' wallets, but also hospitals' bottom line.

But a March report from accounting and consulting firm Dean Dorton Allen Ford really drives the point home: In Kentucky, hospital-owned practices of all sizes are losing as much as $100,000 per doctor each year. The longer a hospital owns physician groups, the more likely it is to lose money on them while the more physicians a hospital employs, the higher the likelihood of operating losses.

Meanwhile, another unintended consequence of hospital-physician integration can be job dissatisfaction. Don't assume hospital employment, free from the burdens of private practice, guarantees happy physician employees. It seems the road following practice acquisitions can be a rocky one, filled with challenges and complaints. Bottles pointed to a recent study showing hospitals can expect to deal with employed physician complaints about being unable to make staff decisions, having less authority over billing and charge coding, and being forced to use new equipment and technology.

Adding to a tough transition is the fact that with physician practice acquisitions can come major challenges combining cultures, according to a March survey by healthsystemCIO.com.

So what can hospitals do to make hospital-physician integration work? Before even buying a practice, invest in infrastructure and management that already are experienced with running physician groups, Allen D. Kemp, M.D., CEO of Centura Health Physician Group in Colorado told attendees at the Becker's Hospital Review Annual Meeting in Chicago on May 10.

Moreover, successful hospital-physician integration calls for physician input and participation, so hospitals leaders should get physicians involved in committees, decisions, recruitment and policy-making efforts.

Jonathan Burroughs, M.D., physician executive and Hospital Impact blogger, said a vice president of medical affairs summed it up well: "If physicians commit to a higher purpose that has deep personal meaning, they will drive it further than you can imagine; however, if an issue is forced upon them without input or discussion, they will not budge an inch."

What other consequences might result from hospital-physician integration and how can hospitals ensure a smooth transition? - Alicia (@FierceHealth)

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