Hospitals, staffs feeling a financial pinch

Nonprofits face challenge of staffing, but they're getting better at purchasing and contract negotiation.

By Cheryl Jackson, AMNews staff. Sept. 24, 2001.

Hospitals continue to reduce the number of employed physicians on staff, and those primary care physicians who remain employed by hospitals are more often having their pay tied to the numbers of new patients they bring in.

That's a result, says a financial analyst, of nonprofit hospitals' financial health worsening or treading water.

"They're changing the contract terms to produce more incentive- and productivity-based compensation," said Bruce Gordon, senior vice president of Moody's Investors Service, one of two debt-rating agencies to issue financial reports on hospitals. "You eat what you kill," he said.

Such moves should not be hard for physicians to swallow, said Stuart Seides, MD, cardiologist and president of the Medical Society of the District of Columbia.

"By and large, the notion of physicians being employed by hospitals in many situations has proven to be an unsuccessful strategy. When you look primarily at clinicians, the employment results at times in isolating those physicians from the realities of the marketplace," Dr. Seides said. "Those physicians get a paycheck, and that paycheck is not reflective of productivity or the reimbursement levels that are out there. And it does not give them any sense of the hassle involved in what you do.

"At the end of the day, physicians of all stripes -- regardless of what their particular situation is -- are having to become responsible for their own economic support."

In a report to be released this month, Moody's Investors Service said the financial declines nonprofit hospitals experienced in 1998 and 1999 flattened in 2000. [...]