Disgruntled Physicians and Unhappy Hospitals

Preface: The following appeared as an Op-Ed piece in the New London Day, the leading newspaper in Southeastern Connecticut. Its purpose was not to criticize but to explain what is at stake for hospitals and doctors.

In her October 8 piece in The New London Day, “Disgruntled Physicians, L&M to Discuss ‘Adversarial Relationship’, Judy Benson does an excellent job describing the tensions between L&M hospital and its medical staff.

As someone who has written a book on this subject, Sailing The Seven “Cs” of Hospital –Physician Relationships; Competence, Convenience, Clarity, Continuity, Competition, Control, and Cash (Practice Support Resources, 2006), I would like to point out these tensions are inevitable and are not unique to New London.
Why inevitable?

• Hospitals and their medical staff compete for business, sometimes referred to as “lines of service.”

• Over the last decade or more, much of this business has shifted outside hospital walls into the outpatient arena, where outpatient diagnostic and surgical centers now proliferate, some owned by hospitals, some owned by physician investors.

• Improved technologies and less-invasive techniques make it possible to perform these procedures quickly during the day without a hospital stay with short recovery times.

• Lower reimbursements, increased regulations , and higher expenses threaten the economic survival of both hospitals and doctors, who find themselves fighting over a smaller economic pie in a zero-sum game, meaning when one side wins, the other loses.

• Hospitals and doctors have vastly different organizational structures and cultures. Hospitals are hierarchical corporate organizations, with one person and an executive team at the top. Physicians are more democratic structures, with each doctor having a potential veto vote. These differences make for awkward, time-consuming decision making.

• The Affordable Care Act, often referred to as Obamacare, passed on March 23, 2010, at its core, will systematically decrease payments to hospitals and doctors over the next ten years, with Medicare payments projected to be less than Medicaid payments by 2019.

Medicare and Medicaid now cover 110 million Americans and are the financial lifeblood of hospitals and some physician practices. Most hospitals and most physicians cannot simply “opt-out” of seeing government-subsidized patients. Hospitals and physicians must adjust.

One of these “adjustments” is hospitals hiring more physicians and forming their own physician networks. This threatens the remaining “independent physicians,” who own their own practices and who do not have the marketing power or capital of hospitals.

Another “adjustment ,” favored by the Obama administration, is the formation of “accountable care organizations.” In these organizations, hospitals and doctors theoretically collaborate to provide more “efficient care” with cost savings for Medicare patients. Hospitals and doctors share the savings. These organizations are in their infancy, and many obstacles – bureaucratic, anti-trust, legal, and power-struggles – lie in their path.

Whatever happens as the result of new health reform law, it will change the landscape of medical and hospital practice forever, as I explain in my book Obama, Doctors, and Health Reform (2009).