Hospital-employed docs may complicate value-based care

The nature of the hospital-physician relationship is in a state of flux that could create further instability for both hospitals and the broader healthcare industry, argues a blog post from Health Affairs.

Furthermore, increased hospital physician employment may be at odds with healthcare policy goals, write Jeff Goldsmith of the University of Virginia, Nathan Kaufman, a healthcare consultant, and Lawton R. Burns, Ph.D., of the University of Pennsylvania.

It may look at first as though hospitals hold more cards than before when they hire physicians as salaried employees, they write. Historically, the two sectors have operated in distinct silos, particularly in states with laws that ban physician employment by non-physician controlled organizations. However, between 1998 and 2013, they say, physician employment by hospitals grew to encompass nearly 20 percent of practicing doctors before the pace flatlined in 2014.

This movement appeals to policymakers who push the transition to value-based care models, because increased physician employment offers hospitals a chance to better coordinate care and it reduces those doctors' incentive to deliver unnecessary care. In practice, however, physician employment actually spikes health costs, they write. Market pressures have led to practice expenses and hospital compensation far beyond any revenue collections they generate, according to the blog post. 

Physician employment is also a major driver of hospital expenses, the authors write, with physician subsidies comprising about 10 percent of the average community hospital's budget. The figure is likely to be higher in impoverished regions where local physicians are hospitals' only option. Moreover, they say, as more baby boomer physicians retire, they are often replaced by newly-licensed, heavily-indebted millennial doctors who are less likely to involve themselves in policymaking or system development. 

To learn more:
- read the blog post