Thursday, February 25, 2010

Hospitals and Doctors, Medical Trends, Physician Business Ideas: Hospitals Acquire Multispecialty and Specialty Practices

Yesterday I was speaking to Mike Martin, president of Practice Support Resources, Inc, in Independence, Missouri. He was just back from a trip evaluating specialty practices for sale to hospitals. He tells me hospitals are purchasing specialty practices at a record pace. Acquisitions of certain practices, such as cardiologists, Mike says, are absolutely booming.

This does not surprise me. When I was practicing at a hospital in Oklahoma City, the two biggest admitters to the hospital were cardiologists. The hospital depended heavily on those two, who accounted for 25 percent of all admissions.

It is no secret that 80 percent to 85 percent of most hospital bottom-lines depend on cardiologists, orthopedists, and other procedural specialists. This is especially true for rural hospitals, who consistently lose money on disproportionally large Medicaid and Medicare populations.

I am tempted to say, “ I told you so.”

On January 12, I wrote a blog entitled “ Twelve Medical Megatrends: A Seat of the Pants Analysis.”

Trends three and four were,

Trend Three, more doctors , young and old, will join health systems, eschewing solo practices and bailing out of old practices, seeking employment for security, forgiveness of educational debt, sign-up bonuses, and saner life styles.

Trend Four, hospitals will buy out established specialty practices in record numbers, as specialist groups seek funds for infrastructure, recruiting, and IT expenses, and as hospitals seek to bolster bottom lines and marketing cachet from high profit specialty lines.

These are two of those below- the -radar trends that you hear little about but have profound implications – higher costs because procedures done inside hospitals are more expensive than those done outside, and doctors hired as employees may behave much differently than those practicing outside. Hospital doctors may rely on hospital protocols rather than independent judgments, and will work shorter hours, and will take regular vacations with more time off.

These trends are not necessarily bad, but the future will be different. The trends may exaggerate the doctor shortage and may lead to an employee mentality. Health care will be determined by events that are impossible to foresee and trends that now exist and are observable.

These trends
will accelerate as reimbursements for doctors shrink, such as the 40 percent cuts in Medicare cardiology fees, and as federal demands and incentives to install expensive electronic medical record systems grow.

Only one trend is certain. Economic pressures are forcing hospitals to consolidate and physicians to abdicate from private practices.

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