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Apprehensive, Many Doctors Shift to Jobs With Salaries

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Last year, 64 percent of job offers filled through Merritt Hawkins, one of the nation’s leading physician placement firms, involved hospital employment, compared with only 11 percent in 2004. The firm anticipates a rise to 75 percent in the next two years.

Today, about 60 percent of family doctors and pediatricians, 50 percent of surgeons and 25 percent of surgical subspecialists — such as ophthalmologists and ear, nose and throat surgeons — are employees rather than independent, according to the American Medical Association. “We’re seeing it changing fast,” said Mark E. Smith, president of Merritt Hawkins.

Health economists are nearly unanimous that the United States should move away from fee-for-service payments to doctors, the traditional system where private physicians are paid for each procedure and test, because it drives up the nation’s $2.7 trillion health care bill by rewarding overuse. But experts caution that the change from private practice to salaried jobs may not yield better or cheaper care for patients.

But many of the new salaried arrangements have evolved from hospitals looking for new revenues, and could have the opposite effect. For example, when doctors’ practices are bought by a hospital, a colonoscopy or stress test performed in the office can suddenly cost far more because a hospital “facility fee” is tacked on. Likewise, Mr. Smith said, many doctors on salary are offered bonuses tied to how much billing they generate, which could encourage physicians to order more X-rays and tests.

Mr. Mechanic studied 21 health systems considered good models of care — including the Mayo Clinic and the Palo Alto Medical Foundation — and discovered that many still effectively rewarded doctors for each procedure. “It doesn’t make any sense,” he said.

The base salaries of physicians who become employees are still related to the income they can generate, ranging from under $200,000 for primary care doctors to $575,000 in cardiology to $663,000 in neurosurgery, according to Becker’s Hospital Review, a trade publication.

Dr. Joel Jacowitz, a cardiologist in New Jersey, and his 20 or so partners decided to sell their private practice to a hospital. In addition to receiving salaries, that meant they no longer had to worry about paying malpractice premiums themselves or finding health insurance for their staff members.

Dr. Jacowitz said that the economics drove the choice and that the only other option would have been to bring in more revenue by practicing bad medicine — ordering more heart tests on patients who did not need them or charging exorbitant rates to people with private insurance. He said he knew of one cardiologist in private practice who charges more than $100,000 for a procedure for which Medicare pays about $750.

“Some people are operators and give the rest of us a bad name,” he said, adding that he had changed his opinion about America’s fee-for-service health care system. “I’m fed up — I want a single-payer system.”

Various efforts to change incentives for doctors and hospitals are being tested. An increasing number of employers or insurers, for example, pay health systems a yearly all-inclusive payment for each patient, regardless of their medical needs or how many tests are dispensed. If doctors order unnecessary tests, it costs the hospital money, rather than bringing it in.

And instead of offering bonuses for productivity — doctors cite pressures from hospital employers to order physical therapy for every discharged patient or follow-up M.R.I. scans on every patient who got an X-ray — some hospital systems are beginning to change their criteria. They are providing bonuses that reward doctors for delivering high quality and cost effective care, such as high marks from patients or low numbers of patients with asthma who are admitted to the hospital.

I wonder if the hospitals have ever explored getting into the coverage business?  This would get rid of the desire to over treat/test, as they try to capture some money from the insurance companies.

It would be an interesting experiment. I wonder if legally they're allowed. 

We would have to make sure they kept up the "standard of care", but we already do that with insurance companies.

Well then I hope a hospital tries this so we can understand if the model works.

We should do a study of it, hopefully someone is working on this!

I searched the web and could not find evidence of an existing effort.

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