Health Reform is Driving Physicians and Hospitals Together

Once, physicians would have preferred to compete with a local hospital, now the two want to work together to maintain revenues.

A health reform measures push physicians and hospitals closer and closer together, these new allies have to learn to align their interests. A study by PricewaterhouseCoopers shows for the sake of increasing, or even maintaing, revenue, physicians and hospitals will need to work together.

Almost 75% of physicians surveyed are already aligned financially in some way with hospitals and almost a quarter work primarily in hospital practice settings. According to the report, physicians believe that it pays more to align with a hospital rather than compete with it. The survey reports that 56% of physicians want to be more closely aligned with a hospital in order to increase revenue.

This sentiment stems from market changes such as “decreasing reimbursement and falling patient volumes resulting in more physician-owned enterprises being sold,” the report says. And health care reform is only accelerating that trend.

“With Medicare fee-for-service and Prospective Payment System reimbursement being squeezed, the biggest potential income stream for both hospitals and physicians may reside in sharing savings from payers,” the report says. “To do that, hospitals and physicians must manage care together.”

Of the physicians considering hospital employment, 83% expect to be paid the same as or more than they are now. Less than one in five said they would accept a pay cut to work for a hospital. Also, PwC reports that physicians want half their salary to be fixed and the remainder incentive based. Hospital leaders agree that salaries should include quality incentives and they said that they won’t go back to a salary model that doesn’t include physician productivity measures.

Beyond money matters, nearly all physicians want more say in the governance and management of hospitals, according to the PwC report. This is something that hospital leaders aren’t quite ready for yet.