ACOs are only able to be formed as a result of a large ‘mega-group’ or significant number of physicians clinically integrated with a health system. Through the clinical integration, they need financial integration, and for that to happen it needs to be done through employment or a close-to-employment agreement. So, [the healthcare reform legislation] is driving the consolidation of hospitals and practices.”
Employing a large number of physicians is generally viewed by healthcare leaders as a mark of a hospital’s financial strength, not only for the referrals and income generated but also for the negotiating leverage a large network can use with payers.
“As you look to the future for most standalone entities and look at the level of [financial] support needed to continue to be a standalone, it will be tough [for these entities to survive],” says Jerry Youkey, MD, vice president for medical and academic services at Greenville (SC) Hospital System University Medical Center and dean of University of South Carolina School of Medicine–Greenville.
Nonprofit GHS employs 566 of its 1,200 physicians and is one of the largest hospitals in a market that has been employing physicians for at least two decades.
“Employing physicians is the most significant strategy for any organization these days. You must build an effective primary care and specialty care network,” Nantz says. “You’ve got to have the patients, and therefore you’ve got to have the physicians. And the physician-hospital employed model is the most likely relationship to encourage doctors to lead the charge toward [care] transformation—so we can all survive and thrive in a post-reform environment.”