"Having 20 employed physicians may seem low, but that's nearly doubled from what we had recently—mostly in primary care. Employing wasn't something we've done. We have approximately 300 physicians practicing with us, but many of the physicians are on the clinical council at other hospitals or have joint ventures with other organizations. We have to be mindful of our market and the need."
Employing physicians can seem like a great option, notes Manas, but it's not always the best one. James Jarrett, president of the New Jersey ProCure Proton Therapy Center, part of ProCure Treatment Centers based in Bloomington, Ind., agrees, noting that joint ventures can offer a different level of motivation for physicians. The New Jersey facility opened in March 2012 and Jarrett was responsible for staffing. With a private equity background, he had the bottom line firmly in mind when the organization opted to not employ physicians, instead favoring partnerships.
"We don't employ any physicians in this entity, though a lot of doctors do ask me about it, as do a number of our hospital partners. Employing physicians is very much top-of-mind. But we partner or use joint ventures with our physicians," he explains. Our doctors are part owners, and we feel it will drive better longer-term patient care behavior."
Though the joint venture agreements vary based on geography and state laws, physicians with ProCure don't have to participate in the business side of the operation and are concentrating on treating patients. Jarrett notes, however, that for previously independent physicians these arrangements can allow the doctor more independence while encouraging them to help the organization grow.
"Employed physicians may find they have to participate in broader health system initiatives, and not every person will agree with every initiative. Doctors may be expected to keep referrals in-network, or the physician may have certain objective targets to meet. It can give the physician an overall feeling that they are being driven by profit, whether that's true or not," says Jarrett.
Reform and the ROI equation
Mark Browne, MD, MMM, CPE, FACPE, is senior vice president and chief medical officer at Covenant Health, a Knoxville, Tenn.–based system that includes seven acute care hospitals in East Tennessee and employs 125–150 physicians, 70% primary care and 30% specialty. He notes that defining the clinical and financial rationale for employing physicians is still driven by the market demand and clinical need to fill service line gaps.
"We have to assess the clinical need for the community. Employment is rarely our first choice, but given a particular physician or the circumstances, such as an underserved population in a particular specialty, then we certainly put employment on the table, but we want an agreement that leads to strong long-term alignment," says Browne.
Still, healthcare organizations need to make margin, and attaining an ROI for these physicians is important. "These days, the best way for us to measure ROI is by tracking the quality of care of the physicians, though that doesn't always visibly connect with the financials. Part of the secret sauce is to partner with a physician who wants to achieve the same outcomes you want. That leads to better ROI and lower costs," says Browne. "Tracking the ROI from physician employment isn't as linear as buying an MRI and tracking use."