The Potential Dark Side of the Physician Employment Boom
By Travis Singleton
The employment of physicians by hospitals, medical groups, Federally Qualified Health Centers (FQHCs), urgent care centers and other healthcare facilities is a well-established trend that is virtually guaranteed to accelerate. While serving its purpose in an economically and regulatory market, will physician employment be a positive trend for medicine in the long run?
According the national survey of over 20,000 physicians that Merritt Hawkins conducted for The Physicians Foundation, 53% of physicians self-identified as employees in 2014, up from 43.7% in 2012. Merritt Hawkins’ 2015 Review of Physician and Advanced Practitioner Recruiting Incentives indicates that approximately 95% of job openings for physicians today feature employed settings while only about 5% feature independent practice settings.
Thanks in part to the new Medicare physician payment system replacing the Sustainable Growth Rate (SGR) formula, even more physicians are likely to seek employed positions in the future (please email me if you would like a copy of Merritt Hawkins’ white paper reviewing new physician payment models).
The hoped-for result of widespread physician employment is greater clinical integration, cost efficiency, and enhanced quality of care yet data supporting these predictions have been hit-and-miss at best. The dirty little secret to an employment shift in our market on this scale is its almost certain to have inherit challenges. These challenges include increased turnover, decreased physician productivity, potential financial loss on some acquired physician practices, and a change in the essential character of the medical profession.
Some of these challenges already are apparent. According to data company SK&A, physician turnover/relocation has grown to 12% annually for all specialties, and is up to 13.47% for family medicine, 14.57% for psychiatry, and 13.33% for emergency medicine. These numbers largely do not include physicians who changed employers within the same general market (aka “switched flags”). The physician survey referenced above also indicates that employed physicians see 8.5% fewer patients per day than do independent practice owners, a significant difference in productivity. Some hospitals report losses on the salaries they pay employed doctors, though these losses can be recouped through the downstream revenue physicians generate.
As for the “character” of the medical profession, it is likely to change as “patient ownership” increasingly accrues more to institutions and less to individual physicians. In other words, you no longer will be “Dr. Smith’s patient,” but rather “XYZ Hospital’s patient.” While both sides have their merit, it is a seismic shift for the US health system regardless.
It is to be hoped that the effect of the employed physician model will be a net gain in quality and efficiency, and employment certainly provides the easiest roadmap to reach those goals. However, there is no question that there will be some bumps along the way. It’s time we offered some focus for the challenges of physician employment versus solely concentrating on its potential.
Travis Singleton is Senior Vice President of Merritt Hawkins, the nation’s leading physician search and consulting firm and a company of AMN Healthcare (NYSE: AHS). He can be reached via email or by phone at 800-876-0500