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26 October, 2010 Posted by John G. Self Posted in Healthcare
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Physicians Forced to Tighten Belts or Sell Out

Posted October 26th, 2010 | Author: John G. Self

Surveys show that physicians are considering employment options at a record pace.   There is a clear sign that hospitals, eying healthcare reform and the absolute certainty of wave upon wave of reductions in Medicare spending, are moving aggressively to close deals with key physician groups.

Even before reform regulations can be created, there is an incredible sense of urgency building. 

Now physicians, frustrated with Congress’s failure to adjust their Medicare reimbursement rates, and realizing that the worst is yet to come, are taking other actions to survive.   

The Medical Group Management Association (MGMA) reported Tuesday that more than 62% of medical practices will likely limit the number of new Medicare patients they accept if scheduled reimbursement cuts go into effect.  Nearly half of practices said they will stop seeing new Medicare patients altogether.

At a time when the whole point of the healthcare “reform”  movement seemed to be focused on improving access for patients, it is more than a little ironic that we are now constructing new barriers for access with the financial savings that were shaved from hospital and physician reumbursement to help pay for the costs of improving access.  This is an excellent example of the  legislative law of uninted consequences.  For most physicians in private practice, it is just maddening.

In a report from the MGMA conference in New Orleans, Modern Physician reporter Maureen McKinney wrote, “More than three-quarters of respondents said they will likely delay the purchase of new equipment or facilities, while about half said they planned to reduce clinical staff. And roughly 45% said they will probably put off purchasing electronic health-record systems.”

With these kinds of pressures, it is not surprising that physicians are willing to sell a business they built, many from scratch when medicine was a cottage industry, to avoid managing a new business model that will alter their lives and their finances. For many, selling out is the only life raft they can see. 

For organizations acquiring physician practices, predominantly health systems and hospitals,  the real question is how well they can manage physician financial expectations and productivity issues.  Those were two of the deadly torpedoes that doomed the hospital industry’s first attempt to integrate physician practices.   

Add to this mash of issues, surveys show that newly minted resident physicians strongly prefer employment to the far riskier approach of hanging out their own shingle. Even PCPs, who historically were more inclined to follow that path, favor the employment option.

For human resource departments, practice acquisition will create a whole new class of employees and a different set of compensation, benefit and retention issues that could well tax their experience and resources. This will be especially true in secondary market hospitals where HR may be a part-time function.  

© 2010 John Gregory Self

© 2014 John Gregory Self

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