7 Options for Physicians Wary of Employment

Kenneth J. Terry, MA

Disclosures

January 13, 2016

In This Article

Employment Is Not a Panacea

The environment for independent physician practices has fundamentally shifted in the past few years. In many parts of the country, hospitals are much less interested in acquiring practices than they had been. However, they continue to look for ways to more closely align independent physicians with their interests.

Meanwhile, the shift to value-based reimbursement—among other factors—is placing smaller practices at a disadvantage. Even where physicians have learned how to use electronic health records (EHRs) effectively in traditional, visit-based care, they need a more sophisticated infrastructure and additional resources to manage their patient population.

As a result of these changes, experts say, independent physicians should start thinking about how to form clinically integrated networks with their colleagues. They should also look at every possible way to make their practices more economically viable in order to compete with the big healthcare systems.

For physicians who see the changes coming but still don't want to be employed, there are alternatives to employment that physicians should consider.

Hospital Acquisitions Are Slowing Down

The experts we interviewed agreed that the pace of hospital practice acquisitions has slowed considerably, although the situation differs in various markets across the country.

David Zetter, a practice management consultant based in Mechanicsburg, Pennsylvania, says, "It's down tremendously because hospitals probably have as many practices as they can handle at this point." A number of Zetter's clients tried to sell their practices recently. The local hospitals either weren't interested or offered them practically nothing for their assets, he says.

Hospitals on the East Coast and in parts of the South are still buying practices, says Michael LaPenna, a healthcare consultant in Grand Rapids, Michigan. But in areas where most of the consolidation between hospitals and practices has already occurred, such as west Michigan, Detroit, Chicago, Minnesota, Seattle, and California, that's no longer the case, he says.

Kevin Kennedy, a principal with ECG Management Consultants in Seattle, has also seen fewer hospital purchases of practices. "Some health systems grew very rapidly, and there was a feeding frenzy to acquire practices," he notes. "So in the last couple of years, we've seen some of our clients take a break and do a better job of organizing what they have."

In some markets, he adds, there are virtually no private practices left. In others, some physicians have hung onto their shingles, despite hospital overtures. "They value independence more than economics or future security. So there are cultural reasons why integration with a hospital would be difficult."

In markets where private practices are still alive and well, hospitals are trying to align with them in other ways. They may offer management services, subsidies and technical support for EHRs, or medical directorships. But their ultimate game plan is to get the independent doctors involved in their clinically integrated networks, which will eventually take financial risk for care and lose bonus payments if they do not reach their target costs for providing care.

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