Hospitals and Doctors, future - The Future of Hospitals and Baby Boomer Physicians

This is not a good time to be a hospital CEO.

From the Bush Medicare budget request over the next five years comes this news.

• The largest amount of Medicare cuts, by far, will come from hospitals: $15 billion from an across-the-board reduction in the annual updates for inpatient care; $25 billion from special payments to hospitals serving large numbers of poor people; and $20 billion from capital payments for constructing hospital buildings and the purchase of equipment.

And from the mean streets come these pieces of news about baby boomer physicians.

• The urge for physicians to be employed by hospitals will surge. Younger and older baby boomer physicians want security, time off, regular hours, vacations, malpractice coverage, and relief from the risks of running a business. This makes hospital CEOs wary because they took a financial bath during the late 1990s when they acquired hospital practices. Still. doctors need intensivists, hospitalists, ER doctors, and even general surgeons – positions in which doctors can enjoy 40 hour work weeks. For hospitals, these doctors, often in short supply, do not come cheaply. It costs as much as $443,000 to recruit a cardiologist, $471, 000 an orthopedic surgeon, $263.000 an internist, and $246,000 for a family physician.

• At the same time, more physicians are seeking independence from hospitals. The shift to ambulatory care is in full swing, as doctors seek autonomy. Unfortunately, for the hospital CEO, many physicians seeking less dependency - orthopedic surgeons, cardiovascular specialists, proceduralists of every ilk – contribute the most to hospital bottom lines. The lure of being your own person of controlling your own destiny in terms of income and clinical practice is well nigh irresistible. This means hospitals must hire these specialists for internal coverage and external coverage.


• Conflicts over call coverage will haunt hospitals. Legally hospitals have to be open 24 hours a day and to accept all comers to the emergency rooms. This is tough when uninsured rolls are growing, and people tend to go to the ER rather than bother their doctor. Furthermore, specialists are reluctant to come in at all hours to treat patients they have never seen, who pose formidable malpractice risks, and who cannot afford to pay.

• The physician shortage is intensifying. The Council on Physician and Nurse Supply, an independent group of healthcare leaders based at the University of Pennsylvania, has called on the White House to convene a special conference to address an estimated 30% national shortage of physicians and nurses. The council estimates the U.S will be 150,000 to 200,000 short of physicians by 2020, and nursing schools must produce 30,000 more nurses a year to keep up with demand. This shortage places new economic demands for hospitals, who must pay more recruiting expenses or hire locum tenens physicians or traveling nurses to fill the gaps.



Small wonder hospital CEOs place physician relations and nurse shortages as number one and two on their agendas. The good news is that hospitals have been running record profits over the last five years and have a cushion to address these problems. The bad news for hospitals that no immediate solutions are in sight. They good news for doctors is that they are in greater demand and call the tune. The bad news for some, not all, is that they must become employees rather than independent practitioners.