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Docs Flocking to Hospital-owned Practices, Says Report

Hospital-owned practices were the most successful in attracting physicians in 2009, according to a report from the MGMA, which says one of the key drivers for this trend could be higher starting compensation.

Hospital-owned practices were the most successful in attracting physicians in 2009, according to a report from the Medical Group Management Association (MGMA), which states that 65% of established physicians and 49% of physicians hired out of residency or fellowship were placed in hospital-owned practices.

Higher starting salaries could be one of the drivers for this trend as primary care and specialty care physicians in hospital-owned practices were offered more in first-year guaranteed compensation than those in independent practices. Historically, this has not been the case, says MGMA.

The gap between first-year guaranteed compensation offered for specialty care physicians had been shrinking since 2007. Primary care physicians reported median first-year guaranteed compensation of $160,000 in 2009 while specialists reported $230,000.

The report also shows that first-year guaranteed compensation has dropped by 2.1% since 2006 for specialists in single specialty practices, whereas primary care first-year guaranteed compensation has increased by 17.4% in the same timeframe. Meanwhile, first-year guaranteed compensation for specialty care physicians in multispecialty practices has risen by 3.2% since 2006. During this same period, first-year guaranteed compensation for primary care physicians in multispecialty practices has increased 14.3%.

“Physicians are moving to hospital-owned practices for a number of reasons,” said Brenda Lewis, president of B.E.L. & Associates, Inc., and MGMA survey advisory committee member. “There is uncertainty of reimbursement for the future. Physicians are looking to sustain income to pay office overhead and have a paycheck to take home, and those with large Medicare populations are more likely to want to move to hospital-employed positions.”