Hospitals and Doctors, Physician Business Ideas; Physician Employment by Hospitals

There is simply no question about it: most hospitals cannot survive without physician employment, and most physicians are ready to be employed. For these two reasons, in the hospital world, physician employment is the hottest topic going. As the old saying goes, “One cannot run a hospital with doctors, and one cannot run one without them.”

If you doubt the bigness of hospital employment, I invite you to read Merritt, Hawkins & Associates book Guide to Physician Recruiting, which notes that hospital recruiting of physicians has nearly doubled over the last five years. Or go to Healthleaders Media, a website targeted at hospital executives, and you will find 128 articles on physician recruiting published in the last two years.

I have more than a passing interest in hospital-physician relationships. In 2006, Jim Hawkins, a former hospital CEO and then an orthopedic group administrator, and I wrote a book Sailing the Seven “Cs” of Hospital-Physician Relationships: Competence, Convenience, Clarity, Continuity, Competition, Control, Cash (PSR Publications, 2006).

The book clarified my thinking on the subject. It addressed some of the fears surrounding hospital-physician relationships, which Peter F. Drucker, the management sage, memorably called “The Double-Headed Monster.”

Fears included:

1) philosophical opposition to the “corporate transformation of medicine”;

2) fear of competition for patients;

3) fear of competition for hospital beds;

4) fear of the part of older physicians that new, usually younger physicians, would change standards of care;

5) resentment that younger physicians should be helped to start their practices.

Certain changes have either allayed these fears or made them irrelevant.

• shortage of physicians

• desire of younger physicians to seek the security and benefits of employment

• success of the hospitalist movement

• expenses required to built an electronic infrastructure

• hospital marketing of high tech technologies

• the stark fact that specialists deliver 80% to 90% of hospital bottom-lines

• dropping reimbursement for hospitals and doctors

What is occurring is quite simple. To save their own skins and to live comfortably in this brave new world of health reform, hospitals and doctors are “consolidating,” “integrating ” “aligning” , or engaging in “co-petition”, or whatever other catchphrase you want to use. No single phrase and no single management philosophy fit all. Personalities of hospital and physician leaders matter, and above all, the size and market dominance of a hospital and its affiliated groups are what counts.

In the March-April issue of Spectrum, I ran across an article entitled “Physician Employment Revisited,” with this subtitle, “Most hospitals today cannot survive without a physician employment strategy. But can your employed group attract doctors and support hospital goals at the same time? Yes – if it demonstrates five key characteristics. “
The authors, Jeffrey Peters, chairman of Health Directions in Chicago, and Timothy Palm, CEO of the Saint Alphonus Medical Group, In Boise, Idaho, give these five keys for success.

1. Physician-centered culture

2. Aligned compensation

3. Investment in practice management

4. Focus on quality and innovation

5. Strong market brand

With these two caveats,

1. The strategy is unlikely to work if the hospital does not recognize imaging services, ambulatory surgery, and similar services are a big part of physician income.

2. The hospital must try to help integrate primary and specialty care without antagonizing powerful specialists.

Concerns and anger among doctors about unfair hospital competition can sink a hospital-physician organization and lead to a “no-confidence vote” for the hospital CEO.