Online Health Care Innovation Forum:  Needed, A New Physician Hospital Business Model

A business model describes the relationship of how an organization creates, delivers, captures economic, social, and and cultural values.

Business Model definition

A hospital administrator is a hybrid between a facility  survivalist and a physician negotiator – stuck halfway between two cultures.

Anonymous

Scott Gottlieb, a physician who doubles as a senior fellow,  had a journalistic doubleheader yesterday :

·         “Hospital-Doctor Buying Binge Likely to End Badly,” Forbes Magazine

·         “The Doctor Won’t See You Now: He’s Clocked Out, “ Wall Street Journal

The thrust of each article was the same: When hospitals acquire physician practices,  as they are now doing at a record pace,  physician productivity plunges,  and both sides lose.

In Forbes, Gottlieb questions:

“Why should all of this be a concern? Because the only way we are going to solve our long-term fiscal challenges when it comes to programs like Medicare and Medicaid is to improve productivity, so that we can get more healthcare for every dollar of GDP that we spend on it.”

“Under these terms, the last thing we want to do is adopt policy measures that lead to arrangements that will lower productivity. Yet that is exactly what we have done under the Affordable Care Act.”

“The result is predictable. The only entities pursuing this sort of integration are the entrenched players. And it’s mostly the hospitals that are playing. Not because they necessarily want to run ACOs, but because they want to consolidate local physicians to secure monopoly-like positions that give them bargaining power. Studies show that this sort of market concentration leads to higher healthcare costs.”

In the Wall Street Journal, Gottlieb continues:

“Estimates by hospitals that acquire medical practices and institutions that track these trends such as the Medical Group Management Association show that physician productivity falls under these arrangements, sometimes by more than 25% (more on this below). The lost productivity isn't just a measure of the fewer back surgeries or cardiac catheterizations performed once physicians are no longer paid per procedure, as ObamaCare envisions. Rather, the lost productivity is a consequence of the more fragmented, less accountable care that results from these schemes.”

“Once they work for hospitals, physicians change their behavior in two principal ways. Often they see fewer patients and perform fewer timely procedures. Continuity of care also declines, since a physician's responsibilities end when his shift is over. This means reduced incentives for doctors to cover weekend calls, see patients in the ER, squeeze in an office visit, or take phone calls rather than turfing them to nurses. It also means physicians no longer take the time to give detailed sign-offs as they pass care of patients to other doctors who cover for them on nights, weekends and days off.”

What’s needed to remedy this productivity loss is a new business model that aligns hospital physician interests without sacrificing physician autonomy and depriving them of incentives.

One innovative model that has been proposed  and tested in Cleveland is the Physician Enterprise Model (also called Physician Leasing). Physicians provide the practices a fixed percent of collections.   Physicians practice as before, and no capital expenditure is required.  Hospital managers help physicians increase collection rates, coding compliance and enhance billing.  If things don’t work out, the leased is cancelled and the arrangement is wound down.

In another model, the hospital joins arms with medical homes  or with concierge practices in a similar arrangement.

None of these arrangements are easy to put together or maintain, but they don’t interfere with physician autonomy or productivity.   Productivity  will be needed to take are of those 30 million more new patients coming down the Obamacare pike.

Tweet: New physician-hospital models aligning physician-hospital interests are needed to maintain  physician autonomy and productivity.