Why Physician Employment Is and Isn't the Answer

Elyas Bakhtiari, for HealthLeaders Media , August 6, 2009

And many have no desire to. Although physicians are becoming increasingly receptive to employment, many doctors are quite entrepreneurial and realize that they can earn up to four times as much in private practice. As long as the fee-for-service system rewards high volumes of certain easily-repeatable procedures, specialists will have incentives to practice privately and invest in ambulatory surgery centers, imaging equipment, and specialty hospitals.

Some states, such as California and Texas, don't even allow physician employment. Corporate practice of medicine laws take the view that it is when physicians are employed by an institution, not when they practice independently, that they could potentially be pressured to order tests or increase volume to boost the organization's revenue.

Finally, some physicians argue that employment removes all incentives to work hard and see more patients. While it's true that many hospitals got burned in the 1990s when they tried employing physicians only to see productivity drop dramatically, leaders have since learned to incorporate productivity and quality incentives into salaries to keep physicians motivated.

It's not that employing physicians doesn't work—it does for Cleveland Clinic, Mayo, and Winona Health, and it is worth learning from their successes and emulating their models when possible. But every hospital can't integrate into a system and every physician can't practice on a fixed salary.

Healthcare reform would benefit from a few role models that look a little more like the average provider.

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Elyas Bakhtiari is a freelance editor for HealthLeaders Media.

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