BUSINESS

Hospitals returning to hiring physicians

The strategy is aimed at enhancing physician-hospital integration.

By Katherine Vogt, AMNews staff. Nov. 14, 2005.

Once again, hospitals appear to be warming up to the idea of directly employing physicians after a decade of licking their wounds from costly, failed experiments with the strategy, a recent report said.

In a September report on hospital-physician integration strategies, Moody's Investors Service said nonprofit hospitals and health systems were increasingly returning to the physician employment models that were rampant in the mid-1990s.

Although the trend back then was fueled by the looming threat of capitation, now hospitals are looking at physician employment as a means of protecting market share and volume, Moody's said. And this time, physicians are contributing to the trend as they seek stability in the face of declining reimbursements and soaring liability premiums.

The report said that hospitals appear be eschewing practice acquisitions in favor of "less complex employment arrangements," such as direct employment. However, hospitals haven't completely abandoned the practice acquisition strategy. The report did not specify how many physicians are employed by hospitals, either through direct employment or a contractual arrangement.

David Lechner, MD, a family physician in Helena, Mont., said his practice had been a joint venture with St. Peter's Hospital in Helena, but the group decided to sell its remaining stake to the hospital in 2003. It was more efficient to have one entity in charge of management duties and some of the physicians wanted to spend less time running the practice and more time with patients.

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