October 15, 2015

NASHVILLE, Tennessee — Physicians who sell their practice to a hospital and become employees can experience what two hospital executives call "postintegration trauma syndrome."

Symptoms of frustration can flare up when a physician can no longer employ family members in the practice, said Daniel Sykes, a regional vice president of physician services at the LifePoint Health hospital chain.

Sykes said that his publicly traded company holds to this no-relative policy. "Sometimes we can move them to another one of our offices," he reported here at the Medical Group Management Association 2015 Annual Conference. "We try that whenever possible."

Hospital-employed physicians also experience a jolt when they are not allowed to extend a professional courtesy to a colleague, which is the case at LifePoint Health. It operates more than 65 hospitals, predominantly in rural areas and small towns, and employs roughly 900 physicians

"A lot of physicians treat their peers for free," said Tim Godfrey, a senior director of practice management at LifePoint Health. "What we have to educate physicians on is that since they're employed, and we're guaranteeing their income, they're essentially giving away our money, giving away free care. We have to change that. That's a little bit of a shock to some of them."

The underlying cause of postintegration trauma syndrome is loss of autonomy, especially for physicians who have been the boss for 15 or 20 years, Godfrey and Sykes explained.

The Boss's Boss

This affects employed physicians in countless ways. With somebody else as the boss, they can no longer collect account balances from patients in an idiosyncratic fashion, such as letting Mrs Jones pay just $2 a month. The hospital system's collection policies mandate what happens, down to the timing of past-due letters and referrals to collection agencies.

They also can't give an employee a spur-of-the-moment raise. "We have a raise schedule," said Sykes. "We have a bonus schedule."

And, of course, they can no longer take off from work whenever they want. Instead, they must negotiate time off with the practice manager.

It is not in the hospital's best interest for newly employed physicians to sour on the relationship to the degree that they want to bail out. Both Sykes and Godfrey explained that before they ink a deal, they take pains to explain what life as an employee is like, so that there are no surprises.

"We're always encouraging physicians to talk to other providers to understand what it means," said Sykes.

At the same time, hospital systems such as LifePoint Health try to determine whether the physician who wants to flee the hassles of independent practice can stomach the transition to employee. Hospitals performing due diligence also look for warning signs that a white-coat job seeker is a bad bet. One of them is unwillingness to share information about the medical practice on the sales block. "When they say, 'You cannot see the practice tax return,' that is most likely a deal killer," said Sykes.

Some physicians obsess about the "deep pockets" of a publicly traded company such as LifePoint Health, and how that should translate into an extravagant salary. That's another warning sign, said Sykes. Antikickback laws require LifePoint Health to pay only fair-market compensation. "We do not want to give the appearance of buying referrals," he said.

Pushing for Productivity

And forget about the kind of long-term guaranteed salaries that were common 20 years ago until hospitals recognized that they sapped physician hustle, said Sykes. LifePoint Health will guarantee a salary for 3 months, 6 months, maybe a year, and then switch physicians to a combination of base salary and productivity, measured as relative value units (RVUs).

"A big lesson for us is to make sure the physician understands that this is not retirement," he said. "We are looking for productivity."

Godfrey gave an example of a primary-care physician who receives a guaranteed salary of $160,000 for the first year. For the second year, the compensation formula might call for a base salary of perhaps $120,000, with another $40,000 tied to the generation of so many RVUs. The base salary might decrease to $100,000 in the third year, and the productivity component might increase to $60,000.

Sykes said LifePoint Health usually doesn't lower the base salary below 50% of the original guaranteed salary.

Employed physicians often might not get what they want, but hospitals should let them win some of the time, he said.

"Make sure there is give and take in that relationship," he said. "It's a big change, going from private practice to being employed by a hospital."

"Don't sweat the small stuff on some decisions," Sykes said. "Allow that physician some autonomy, which will really help smooth things through."

Medical Group Management Association (MGMA) 2015 Annual Conference. Presented October 14, 2015.


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