Managed Care - July 2008 - (Page 18) Many Changes in Store As Physicians Become Employees By Lola Butcher Contributing Editor merican physicians, known for their autonomy and total control over how and where patients are treated, are throwing in the towel. Unable to make as much money as they did in the past, and recognizing that the business end of a physician’s life is only going to get more challenging, physicians are seeking hospital employment in big numbers. Hospitals are still smarting from unsuccessful physician-practice acquisitions in the 1990s, but they recognize that they must play along if they want to stay in the game. The result, observers say, is a period of rapid hospital-physician integration that will change health care delivery in the United States. “The big trend right now is specialists going to hospitals saying ‘Employ me, please,’” says William Jessee, MD, president of the Medical Group Management Association, the trade group representing more than 13,500 physician practices. “This is the beginning of a fundamental restructuring of how physicians function in the health care system.” For insurers, the wave of consolidations will mean fewer contracts to manage and the possibility of more coordinated patient care. But hospitals and physicians are coming together in the hope of making more money and having more clout, not the best of all possible worlds. Influenced by changing demographics and physician values, the move to a more integrated health care system is driven primarily by financial pressures and the growing feeling that America’s traditional health care business model is no longer serving anyone very well. While thousands of physicians continue to grip their black bags and wish things were the way they used to be, many observers say Marcus Welby is a washed-up model for health care delivery. A “In another five years, the physicians who have struggled to keep the old Dr. Welby vision will have retired,” says Perry Hanson, a partner in Wipfli, a health care consultancy in Wisconsin and Minnesota that is working on 10 physician-hospital integration projects. “And we will have a rapid consolidation of the rest of the health delivery sector.” What’s different this time The pace and strength of the trend are difficult to quantify, in part because the phenomenon is gathering steam. Studies document the demise of solo practices, but do not yet show how many physicians are signing on as hospital employees. The Center for Studying Health System Change last year reported that the proportion of physicians in one- and twophysician practices decreased from 41 percent in 1996–97 to 33 percent in 2004–05. During that same time, the proportion of physicians with an ownership stake in their practice declined from 62 percent to 55 percent. In keeping with health care’s regional variations, physician-hospital integration is stronger in some parts of the country than others. “We see a marked trend toward employment in many communities. In some it has increased to as much as 90 to 95 percent employment,” says Brian McCartie, regional vice president of Cejka Search’s physician search unit. “There are a few exceptions, such as Ohio, where there is not so much integration. I see that more as the rarity than the commonplace.” The current period of consolidation follows an earlier wave of physician-hospital integration, prompted by capitation’s brief heyday in the 1990s, that left many hospital CEOs wary. During that round, hospitals paid dearly for physician practices, which turned out to be huge money-losers, and CEOs found physicians impossible to manage. “Many who went through that have hopelessness or cynicism,” says Francis J. Crosson, MD, senior 18 MANAGED CARE / JULY 2008
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