Does Hospital Employment of Physicians Improve Care?

By October 24, 2016Commentary

There has been a very substantial increase in the percent of practicing physicians employed by or otherwise controlled by hospitals and health systems.  The hospitals have attempted to counter competitive and pricing concerns by claiming that employing physicians allows better coordination of care and otherwise improves quality.  A new piece of research in the Annals of Internal Medicine suggests this is not likely to be true.   (Annals Article)  Using data from 2003 to 2012, the authors first found that over that time period more hospitals were employing more physicians.  In 2003 44% of hospitals had only a medical staff relationship with doctors, 29% had an employment relationship with at least some physicians and 27% had some looser contractual arrangement with doctors.  By 2012 (and certainly even more so since then) 42% said they had an employment relationship with physicians, 19% had some looser arrangement and 38% had nothing beyond the medical staff relationship.  Hospitals that switched to more employment of doctors were more likely to be large, to be teaching hospitals, and to be for profit.

The authors then examined quality as measured by changes in 30 day mortality rates, 30 day readmission rates, and length of stay for heart attack, heart failure and pneumonia, three common and expensive conditions.  They also examined changes in HCAHPS scores.  The researchers found no difference in changes in any of these quality measures among the hospitals who began employing physicians and those which did not.  And since if hospitals were honest, they aren’t buying physician practices or employing doctors for quality reasons; they are doing for financial reasons–to secure referral flows, to increase bargaining leverage with health plans, etc.; so we shouldn’t expect to see quality improvements.

A lot of research has very clearly established that health system ownership of physician practices or employment of physicians results in higher prices and more spending, not something the health system needs.  It also seems to result in reduced perceptions of doctor autonomy and less work satisfaction, which can’t be good for patient quality of care.  This current study just gives one more reason to be very dubious of the value of hospitals employing and acquiring doctors.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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