How Physician Employment Affects Hospitals, Patients

Karen Minich-Pourshadi, for HealthLeaders Media , December 2, 2011

Heated negotiations between a payer and a provider can leave patients caught in the middle. Such was the case with Select Health of South Carolina, which lost access to GHS’ network and physicians when the pair had a payment rate dispute in 2010. GHS dropped the contract, resulting in patients needing to be referred to a hospital 90 miles away for certain services, such as pediatric inpatient and subspecialty care.

Reiboldt says the natural forces at work within the market will keep this situation in check. Indeed, earlier this year, the American Medical Association released a statement to the Subcommittee on Health of the U.S. House Ways and Means Committee stating that the consolidation of the insurance industry could “exacerbate the harm caused by the exercise of market power.” As Nantz suggested earlier, employing physicians helps strengthen the negotiation power of the provider to equal that of a payer in the market.

How much, or if, individual consumer cost of care could be influenced by the rise in physician employment is hard to discern and being carefully watched by lawmakers. However, Reiboldt says ultimately the individual markets will dictate. “I don’t think the employed physician is presenting any harm to quality of care or driving up prices. Competition between hospitals should keep prices at bay.”

This article appears in the November 2011 issue of HealthLeaders magazine.

Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media.
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6 comments on "How Physician Employment Affects Hospitals, Patients"

DonS (12/8/2011 at 1:22 PM)
A complex issue and while some points are valid I would contend that care integration can be achieved without MD employment. The short term effect is to increase costs for patients as ancillary services previously billed by the MD on a CMS 1500 are now billed by the hospital on a UB92. The reimbursement difference is staggering. And consolidation of the providers wont keep down costs - if what I have heard about Sutter Health in CA is true. Lastly, if employed docs keep all the care within the system walls, is that really best for the patient? What system can be best in everything? I'd like the doc to make the best choice for me without having to worry about his employer.

Paul Sauer, MD (12/3/2011 at 7:45 AM)
Once the doctors are controlled by the hospitals and government, their compensation with fall. The doctors will have no leverage to negotiate salary. Will it become like England where doctors make $60,000 to $70,000 a year?

David Keller MD (12/2/2011 at 8:05 PM)
Missing from the article is the effect employment can have on physician productivity... I've seen clear evidence that employment makes physicians less productive and often less responsive to the needs of their patients. It's not all bad, but there are a number of negatives not discussed in the article.




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