Where are radiologist Employed?
- Academic Institution
- Corporate medicine
- Multispecialty group
- Independent contractor
- Private practice group
- Hospital employee
Merritt Hawkins Survey 2011
- More residents (32%) indicated they would prefer to be employed by a hospital than any other option.
- Only one percent of residents indicated they would prefer a solo setting as their first practice. Residents identified “geographic location,” “personal time” and “lifestyle” as their most important considerations when evaluating a medical practice opportunity.
- *Residents identified “availability of free time” as their greatest concern as they consider entering their first medical practice.
Medical Group Management Assn.-2010
- Sixty-five percent of established physicians and 49% of physicians hired out of residency or fellowship in a recent 12-month period were placed in hospital-owned practices
What is Different this Time around in the employment market
- Purchase price. Hospitals are no longer paying the premium prices for physician practices they paid in the mid-1990s.
- Compensation. Today’s physician employment arrangements tie compensation to revenue, giving physicians incentives to focus on productivity.
- Expectations. Hospitals know that most physician practices will lose money, so acquiring physicians is viewed as an investment needed to make the hospital successful. By keeping physicians in the community and closely aligned with the hospital’s interests, hospitals avoid losing market share to a competitor.
Radiology and Integration
- Horizontal integration- Bigger is better
- Vertical integration- not quite as popular
Why Are Hospitals Employing Physicians?
Because They Can!
Why Are Hospitals Employing
- Hospitals fear physicians’ becoming competitors by aggregating into larger integrated groups that direct referrals and utilization to their own advantage.
- Hospitals are willing to take a loss employing PCPs in order to influence the flow of referrals to specialists who use their facilities.
- By employing physicians, hospitals retain maximum flexibility in the market, should health plans change their reimbursement structures to require providers to bear risk and manage population health.
Why are Hospital Employing Physicians
- Hospitals lose $150,000 to $250,000 per year over the first 3 years of employing a physician
- The losses decrease by approximately 50% after 3 years but do persist thereafter.
- For hospitals to break even, newly hired PCPs must generate at least 30% more visits, and new specialists 25% more referrals, than they do at the outset.
- After 3 years, hospitals expect to begin making money on employed physicians when they account for the value of all care, tests, and referrals.
- Outpatient office practices of employed physicians seldom turn a profit for hospitals.
- Some authors argue that hospitals already capture value from physicians without employing them, through stable referral networks and hospital practice choices.
- Integrated care should be higher quality, more coordinated, and more efficient.
- “One-stop shopping” advantage of negotiating a contract with a full spectrum of physicians,
- More difficult for an individual physician to refuse to participate in a network
- Contract negotiations: Pros and Cons
– Fewer contracts to negotiate and manage.
– Those hospitals and health systems that have
achieved a regional hegemony are in a very strong negotiation position
- Larger health care systems may form insurance products and displace traditional insurers from a market.
Physician Employment: Pros
- Reduces uncertainty
- Financial security
- Relief from administrative stress
- Opportunity to participate in an integrated
health care delivery system.
Physician Employment: Cons
- Loss of control
- Lack of equity opportunity
- Your employment situation may change drastically as the health system changes allegiances or ownership or strikes deals with competing outside groups.
– hospital employment may be no more secure than private practice.
Hospitals Employing Radiologists
- Less common
– keeping radiologists on-site
- Eliminate competition
- Incentive alignment
– Negotiating a substantial guaranteed base salary over a long period of time (5 years if possible) regardless of productivity is important.
– Productivity may be out of the employees control.
– Incentive bonus: RVU values should be locked in when the contract is signed.
– On-call time should be clearly specified.
- Staff, Facilities and Resources:
– Specify the staff provided
– Nature of the facilities,
– Resources that will be available (such as radiography, computed tomography, magnetic resonance imaging, and electronic medical records).
– The physician should have input in hiring and firing
– Firing someone is much more difficult in the hospital
setting where the legal intricacies are more involved than in a small practice.
- New physician hires: negotiate some say in this
- Benefits: Vacation time, educational leave, insurance coverage, payment of professional dues, and allowance for educational materials all need to be negotiated and included in the contract.
Employee versus Independent Contractor
Independent Contractor versus Employee
– behavioral control
– financial control
– relationship of the parties
IRS ruling 87-41: Generally the relationship of employer and employee exists when the person or persons for whom the services are performed have the right to control and direct the individual who performs the services, not only as to the result to be accomplished by the work but also as to the details and means by which that result is accomplished.
Source: Independent Contractor or Employee, IRS Department of the Treasury, Internal Revenue Service, Publication 1779 (Rev 12-99), Catalog No. 15134L.
- Assets basis
- Cost basis
- Market basis
- Income basis
Value of Radiologists
- Patient safety
- Quality of imaging
- Quality of interpretations
- Service to physicians and patients
- Cost containment
- Helping build business for the enterprise
To maintain the goodwill and synergy that have characterized the relationships between radiologists and hospitals for many years, both groups need to …….determine whether there are practice models that can meet their respective needs while acknowledging that the parameters of these models will likely be substantially different from those in the past.
- Radiology: Volume 245: Number 3—December 2007
- Legislative, regulatory and financial changes are driving the incentives for integration
- Understanding the economics of physician employment and the actions hospitals will probably take to stem losses will help physicians make wiser judgments regarding employment models.
- Hospital owners will not engage in long-term strategies that lose money indefinitely.
- Though hospital employment may offer physicians some protection from system reforms, it comes with more performance management than it once did.
- The value of the radiologist and radiology services will determine our success in emerging health care delivery models