With more than fifty percent of hospitals planning to acquire physician practices this year, hospital leaders must recognize that physician practice acquisitions may yield unforeseen consequences. Kent Bottles, M.D., a lecturer at the Thomas Jefferson University School of Population Health, discusses how the unintended outcome of physician-hospital integration is starting to become apparent in various regions across the United States.
Theoretically, integration is supposed to help decrease per-capita costs and increase quality by taking advantage of economies of scale and reducing overlapping services in the community served by the hospitals and physicians. In reality, integration is leading to increased costs:
• The American College of Physician Executives surveyed 459 hospitals and health systems and found 32 percent observed costs rise after buying a medical group or practice.
• A March 2013 report further elucidates the impact: in Kentucky, hospital-owned practices of all sizes have been losing as much as $100,000 per doctor each year. The longer a hospital owns physician groups, the more likely it is to lose money. In addition, the more physicians a hospital employs, the greater the likelihood of operating losses.
• Furthermore, a recent study revealed how hospitals face an increase in physician complaints regarding staff decisions, authority over billing and charge coding, and difficulties with new equipment and technology.
Allen D. Kemp, M.D., CEO of Centura Health Physician Group, asserts the importance of investing in infrastructure and management experienced with running physician groups. Moreover, successful hospital-physician integration depends on physician input and participation, so hospitals leaders should involve physicians in committees, decisions, recruitment, and policy-making efforts.
Jonathan Burroughs, M.D., physician executive and Hospital Impact blogger, echoed the words of vice president of medical affairs,” If physicians commit to a higher purpose that has deep personal meaning, they will drive it further than you can imagine; however, if an issue is forced upon them without input or discussion, they will not budge an inch.”