How can hospitals and health systems generate a return on their investment in their physician enterprises? According to the most recent figures, from the American Medical Association, over 25% of U.S. physicians practiced in groups wholly or partly owned by hospitals in 2016 and another 7% were direct hospital employees. Yet, according to the Medical Group Management Association, hospitals’ multi-specialty physician groups lost almost $196,000 per employed physician.
Do Most Hospitals Benefit from Directly Employing Physicians?
Physicians are expensive. What can hospitals do to make sure they’re getting a return on their investments? In this piece, the authors suggest five ways that hospital leaders should rethink their strategy for their physician enterprises: First, they should establish a clear strategic goal and a target return on investment. Second, they should work to strengthen their operations. Third, they should revamp compensation and incentive structures. Fourth, they should pursue reality-based contracts with insurers. Finally, they should make sure to motivate both employed and independent physicians. Ultimately, the authors argue that physicians are more complex than typical employees, and thus they must be given greater levels of strategic ownership over organization-wide goals and initiatives.