No simple answer to best physician-hospital relationship

The best direction for hospital-physician integration isn't clear for either hospitals or physicians.

There’s no doubt that more hospitals are employing physicians, but there’s no easy answer to the best kind of contractual relationship between the two sides.

There are different kinds of agreements for physicians contracting with hospitals, and the shift to tighter physician-hospital integration is complex.

A new study (PDF) from Rice University’s Baker Institute for Public Policy looked at the level of contractual control that hospitals have with physicians at 4,727 hospitals from 2008 to 2013. It considered four types of contractual relationships from least to most tightly integrated: independent practice associations, open physician-hospital organizations, closed physician-hospital organizations and fully integrated organizations.

One fact was clear: During those years, the share of hospitals with salaried physicians rose from 44% to 55% of all facilities.

Meanwhile, one 2016 study found one in four medical practices is now hospital-owned, with 38% percent of U.S. physicians now employed by hospitals and health systems. 

But many hospitals appear to be struggling to find the best arrangement. Looser forms of physician-hospital integration, such as joint contractual networks with managed care organizations, decreased in prominence, the new study found. Some 710 hospitals transitioned to fully integrated organization agreements.

However, there were also hospitals that chose to integrate and then reversed course, as 489 hospitals de-integrated and 110 shifted to less tightly integrated contracts during the time period, the study found.

"The optimal direction for hospital-physician integration wasn't clear for either hospitals or physicians," Vivian Ho, a professor of health economics at Rice and a co-author of the study, said in an announcement

The shift to tighter physician-hospital integration is complex, the authors said.

"When physicians seek hospital employment, they may expect little change in the way their businesses operate, but shifts in decision-making authority, transparency, electronic health records and practice management systems, and HR policies affecting practice staff are among the challenges physicians have to face after integrating with a hospital," said co-author Ayse McCracken, president of eNnovate Health Ventures.

Physician groups that lack the financial and technical expertise to adopt electronic health records are most likely to seek hospital employment, according to study co-author Marah Short, associate director of the Baker Institute's Center for Health and Biosciences.