Today’s healthcare market is experiencing great change as the industry shifts from a payment model that reimburses for the volume of services provided to a value-based environment that rewards for quality of care and cost savings.
With the increasing focus on preventive care, demand for primary care physicians continues to grow at a time when the supply of primary care physicians does not meet the growing demand.
At the same time, many hospitals are purchasing independent physician practices. A study by Avalere showed that 1 in 4 physician practices are owned by a hospital. There are several factors driving this:
- Physicians are worried about costs and reimbursement. With more of healthcare’s financial burden shifting toward patients, it’s getting harder for doctors to collect what is owed. Some small medical practices have challenges staying compliant with government regulations, so by aligning themselves with a larger health system, they can gain access to support staff that can better understand and implement changes. There are also rising operating costs and malpractice requirements on small practices. Some physicians are worried about the future of healthcare reform. Additionally, there is reluctance to manage the complexities of a small business, and a growing desire for better work/life balance.
- Hospitals want to secure and expand the referral network. They like having the primary care doctors within their system refer patients to network specialists for additional services and treatments. Patients are then more likely to stay within the system for additional services and treatment, driving revenue. Hospitals also want to address staffing shortages, and are adjusting to the value-based care environment as well.
As a practitioner, you’ve no doubt wondered if you should stay independent or join the hospital environment. Here are 3 things to consider on that topic:
- Culture. The role of culture cannot be overlooked. Hospital executives run a different business than independent physicians are used to. Physicians, who trained to be autonomous, like to make rapid decisions. Every doctor is their own CEO. Hospitals, on the other hand, embrace the organizational mission. They work as a committee and follow hierarchy. To simplify: Things may move a bit slower.
- Compensation. Many physicians appreciate the salary consistency that comes with joining a hospital. They also like that the hospital is taking on the overhead and administrative burden, and is helping them meet quality measures. Beyond salary, consider benefits, on-call schedules, and other perks when discussing a contract.
- Alternatives. There are other options. You can join an Independent Practice Association (IPA), management services organization (MSO) or other large physician group. These all compete for value-based contracts. As you consider your options, pay attention to which organizations are getting the larger healthcare contracts.
In today’s value-based environment, know what percentage of your business deals with chronic disease. If it’s more than 50%, you should consider joining a group or hospital. If you know that your practice can provide better quality and outcomes than others, you should be able to continue to thrive independently. For more information on this topic, watch our webinar, “Should I join the hospital or stay independent?”