Saturday, August 11, 2007

Hospitals and Doctors - Should Hospitals Own Doctors, or Vice Versa, Or Should They Go Their Separate (and Occasionally) Collaborative Ways

Back in the early 1990s, I co-founded the National Association of PHOs . At the time, I thought physician and hospital could collaborate in some magical way to, among other things, create bundled bills for common procedures.

I quickly discovered five things:

1) the high tech, high income specialties were reluctant to collaborate because they were doing just fine on their own, thank you;

2) a natural mutual suspicion exists between the two as to who is going to be King of the Hill;

3) hospitals generally end up running the PHO ( hence, the expression, “Big H,” little “P”);

4) health plans prefer to negotiate with hospitals and doctors separately;

5) as long as doctors can afford to remain, autonomous, they will..

Fast forward 15 years, and things have changed.

• Doctors, primary care and specialists alike are now approaching hospitals for employment.

• Hospitals and doctors are vigorously competing for high margin ancillary services – joint replacements, heart procedures, CT and MRI imaging services.

• Doctors in various sections of the country are pursuing the “clinic model,” in which physician leaders consider hospitals are considered just another service.

• Multispecialty groups – unable to raise capital to upgrade facilities, fund retirement, recruit and retain physicians,-are turning to hospitals for help and to be merged or acquired.

Now, a whole new spate of hospital physician interactions are evolving to unite doctors and senior leaders. These vary

•from physician employment
•to joint ventures,
•from gainsharing projects
•to creating of centers of excellence,
•and even consideration of the time-honored tradition of the clinic model.

What should be is the ideal relationship? I don’t know. The relationship varies enormously from one region and from one hospital and from one physician to another. It doesn’t lend itself to facile explanations. Many guess is that most hospitals and doctors will run an parallel tracks as long as they can, unless market conditions force them to converge.

3 comments:

Zagreus Ammon said...

Dod-gone. I was just thinking the same thing. Matter of fact I posted this week on my own blog: http://executivephysician.blogspot.com/

I made the observation of the trend of hospital owned physician practices, especially in rural areas and confirmed with it with a couple of consultants on my own.

It puts physician executives in demand, since physicians reporting to physicians is usually a good idea, given the disparate cultures of medicine and management.

I'm not sure that physicians with a technological or procedural edge need hospitals, but capital-intensive specialties put hospitals at an advantage. In the end, it may just mean more physician control of hospitals.

I'll be interested to see how things evolve in the coming years.

Richard L. Reece, MD said...

Thank you for thinking the same thing. I've always thought hospitals have a superior form of organizatin compared to doctors access to capital, funds set aside for contingencies, managerial expertise and so forth. Thie r problem is they can run with doctors or without them.

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