5 Things for Cardiologists to Consider About Hospital Integration and Employment

A recent survey by cardiology service and information provider MedAxiom found that cardiologists are increasingly choosing to integrate with hospitals in response to fee cuts and tighter regulations for private practices. Five months ago, 15 percent of cardiologists surveyed had integrated with hospitals, and MedAxiom president Patrick White predicts that by the end of next year, that number may jump to 70 percent. "Four years ago, if you had asked me if cardiologists would be integrated with hospitals, I would have said no, it's not going to happen," he says. "But in the past four years, physicians are seeing changes in the way they're paid and regulated. One of the ways people have found to handle the pressure is to partner the hospital, sell or lease their practice to the hospital or become a hospital employee."

Here Mr. White discusses five things cardiology practices should think about when considering integration or hospital employment.

1. Fee schedules are taking significant cuts. Cardiologists are suffering significant cuts to their fee schedules, especially in the area of non-invasive diagnostic imaging, according to Mr. White. "The government has ratcheted down payments to the point where it's very, very difficult to survive," Mr. White says. "You might get a 21 percent cut to reimbursement from Medicare, and if the private payors follow suit, a 21 percent cut to revenue is tremendous." Even though more patients are seeking out cardiologists as baby boomers hit the age of cardiovascular disease, revenue per patient is down, so cardiologists are doing business at a loss.

"If you're going to stay in private practice, you have to find new revenue opportunities by learning to do things more efficiently," Mr. White says. Some cardiologists who don't want to completely integrate with a hospital are choosing to quasi-partner with hospitals by managing their cardiovascular service lines, he says.

2. Regulations for private practices are getting tighter. "If you're going to remain independent, you're going to have to understand that regulations are put in place to really influence the way you do business," Mr. White says. "MedPAC has got a bias against physicians owning their own equipment." The American College of Cardiology has also developed appropriate use criteria to determine whether a study is appropriate for a given patient scenario and diagnosis. With a growing concern about cost and radiation exposure, as well as laws on physicians referring patients to a business in which they have a financial stake, physicians in private practice may have difficulty making as much money from diagnostic tests as they did in the past.

3. Hospitals are looking for cardiologists. It isn't just cardiologists who are looking to move from private practice to hospital integration; the shift benefits hospitals too. Because cardiology tends to be one of the big profit centers for hospitals, hospitals need quality cardiology centers in order to be financially viable. "Once you're under the same roof, cardiologists and hospital administrators can get together to improve quality and efficiencies and standardize on equipment," Mr. White says. "Cardiology practices in hospitals can also bill for non invasive diagnostic studies, which is one of the quick ways of seeing returns on your investments if you're a hospital administrator. The smart CEO knows that he should bring cardiologists on board and keep them happy."

Of course, the trend of cardiologists wanting to integrate means competition. "In some markets, this may be really difficult," Mr. White says. Cardiologists may have to dedicate themselves to a particular hospital, rather than admitting patients at several hospitals.

4. Hospital-integrated physicians can practice more smoothly and efficiently. Mr. White says that physicians who integrate with a hospital generally see positive changes in their day-to-day routines. Instead of worrying about finances and focusing on managing risks, physicians can concentrate on practicing medicine. He says, "Physicians are realizing, 'I can be more efficient and the staff understands that patients will be best served if they can make my work easier.' They aren't bogged down by administrative concerns."

5. Integrated physicians recommend integration.
According to Mr. White, a recent MedAxiom survey found that of all the physician groups surveyed that integrated with hospitals, 100 percent would recommend integration to their colleagues. When asked about physician satisfaction, all but one group, which estimated satisfaction was the same, said satisfaction had improved since integration. "When we asked about the driving force toward integration, all the responses were financially related, but once hospitals and cardiology practices turned toward long-term integration, governance became far more important," says Mr. White. Physicians said they enjoyed being able to self-manage and let the cardiologist group board report to the hospital CEO, rather than being micro-managed as they had feared.

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