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The Doctor Buying Binge – It Doesn't Need to End Badly

December 17, 2015


Interesting article in Forbes this week: Hospitals are Going on a Doctor Buying Binge and it’s Likely to End Badly, by Scott Gottlieb, M.D., a resident fellow at the American Enterprise Institute. (He covered the same topic in a Washington Post Op-Ed.)

A summary of his position:
1. The Patient Protection and Affordable Care Act (“ObamaCare”) is driving physicians to employment because the federal government can more easily regulate them when they are consolidated in large groups.
2. Employed doctors are historically less productive so employment will drive up the cost of care.
3. Physician employment will hurt the continuity of care.

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Dr. Gottlieb’s concerns are legitimate but he’s missing a few key points and, more importantly fails to put the onus of success or failure squarely on hospitals and physician leaders:

1. The employment trend started and was gaining steam well before ObamaCare. A younger generation of physicians is seeking the stability of employment. Older physicians are frustrated with the business of medical practice. As payment methodologies shift to rewarding coordinated, higher “value” care, hospitals have seen employment as the most direct path to integrated care delivery models.
2. Nothing in the ACA says that employment is the ONLY way to coordinate care. It can, and is, done via structures that work with independent physician groups. In fact, it could be argued that this would be the smarter way to do it
3. Physician productivity does not go down because they are employed. It goes down because they are employed under contracts and structures with poorly designed incentives. Hospitals are finally realizing that a physician employment agreement should include responsibilities to coordinate care, and a combination of productivity and quality of care bonuses.
4. One of the basic tenets of healthcare reform is a move away from the procedure-based productivity measures of the past that don’t encourage value or quality.
5. Continuity of care is not dependent on whether physicians are employed or independent. It is dependent on the design of the care delivery system. You’ll see highly coordinated models with employed physicians, independent physicians and a combination of the two. Again – it comes down to system design, structure and incentives.

Dr. Gottlieb concludes, “Physician Employment is Bad.” I’d say “Bad Physician Employment is Bad”.

How to ensure “good “ employment:

1. It’s up to hospitals and physician leaders to think about how to develop and manage a highly complex physician “workforce” including re-thinking the selection, on-boarding and development processes.

2. Provide operational support to allow employed physicians to thrive and produce.

3. Provide career development support just like you would with other higher paid employees. Don’t just throw money at them and hope for the best.

4. Set the clear expectation (including contractual obligations) to participate in efforts to constantly improve the care delivery system, quality of care and to reduce costs.

Learn more about a progressive approach to physician selection and development with our Physician Insight Program.

The wave of physician employment continues to grow. Few organizations, however, have changed their approach to recruiting, selecting, managing and developing these highly paid, very valuable employees.

Healthcare Culture


Bryan Warren Bryan Warren was the former Director of Healthcare Solutions at PSI. He was responsible for developing and promoting tools and services designed specifically for the unique challenges faced by healthcare organizations.