Hospital-employed physicians: Financial challenges, opportunities

While many hospitals continue to acquire physician practices, the ventures don't always lead to financial success.

Indeed, some hospitals lost upwards of $200,000 per physician in 2012, according to an article from Hospitals & Health Networks. While median losses have since dropped to $128,000 per physician in 2015, subsidies for physicians may account for 10 percent of a hospital’s budget, a percentage that may be even larger in smaller, rural clinics, according to the article.

However, hospital-employed physicians or practices within a health system do cost systems less when compared to physician-owned practices, according to the article. This is partly because it costs the organizations less to purchase drugs and supplies, and its easier for organizations to standardize coding, documentation and data collection. 

But the next challenge for hospitals will be how to best use bundled payments to reduce physician costs, according to the article. The key will be greater standardization of procedures and healthcare services. Hospital and health system leaders will need to work alongside clinicians to best establish these protocols, according to the article.

Geisinger Health System, for instance, uses a program called ProvenCare, which improves communication between physicians and with patients and families, eliminates unneeded treatments and works to make the correct diagnostic choice from the get-go, according to the article.

A failure to embrace and adapt to Medicare’s recent focus on bundled payments could lead to billions in operating losses for hospitals, according to the article, as they must reduce low-value clinical use and manage the wide variety of ways different physicians can use resources.