Study: Push for Market Share Trumps Clinical Integration in Hospitals' Rush for Physician Employment, May Lead to Higher Costs

While not new, the pace of hospital employment of physicians has quickened in many communities, driven largely by hospitals' quest to increase market share and revenue, according to a study released today by the Center for Studying Health System Change.

Hospitals' primary motivation for employing physicians has been to gain market share, typically through service-line strategies encouraged by a fee-for-service payment system that rewards volume, according to the study. Meanwhile, physicians' interest in hospital employment has grown in response to stagnant reimbursement rates, rising costs of private practice and a desire for a better work-life balance.

While greater physician alignment with hospitals may improve quality through better clinical integration and care coordination, hospital employment of physicians does not guarantee clinical integration, according to the study.

The trend of hospital-employed physicians also may increase costs through higher hospital and physician commercial insurance payment rates and hospital pressure on employed physicians to order more expensive care. Other key findings from the HSC survey include the following points:

• Hospital employment of physicians is growing rapidly across 12 nationally representative metropolitan communities. Exceptions are Orange County, where California law bars hospitals from directly employing physicians, but physicians tend to be tied closely to hospitals through other means; Boston, where physician organizations keep non-employed physicians tightly aligned with the dominant hospital system; and northern New Jersey.
• Hospital consolidation continues to be an important factor in physician employment by hospitals. In markets with high hospital concentration, physicians face pressure to align closely with one hospital system or another.
• While hospital employment of physicians is more pronounced in areas with higher levels of hospital consolidation, it is also taking place in less-consolidated hospital markets.

Read HSC's news release about physician employment.

Related Articles on Physician Employment:

Cardiologist Employment: What Does it Mean?
10 Keys to Successful Anesthesia Employment Models
Pennsylvania's Excela Health to Hire 16 Physicians

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