Physician employment: Both good and bad results

September 6, 2017

Article

Dr. Henry Rosevear looks at how practices have changed since he entered into medicine and what these changes mean for urologists.

Medicine changes. Drugs come and go (Is terazosin still anyone’s first line alpha-blocker?), and surgeries evolve (When was the last time you seriously discussed a Mainz pouch with a bladder cancer patient?).

What surprises me is the speed with which the business of medicine also changes.

Counting residency, I’ve been in this business for about 10 years and, in that short period, I’ve watched as the paradigm has shifted.

More from Dr. Rosevear: Do you own an S corp? Why I made the switch

When I was in medical school, unless you were destined for academia, the most successful practices were single-specialty partnerships owned and run by the doctors. This was certainly not the only option, as numerous small-town doctors were sole proprietors. There were also physicians, such as my father, an ENT, who belonged to large multispecialty groups, but these seemed outliers. As a result, the decision for many young doctors boiled down to academics versus private practice.

But that has changed, with both good and bad results.

On the private practice side, the rise of the hospital-employed physician has been dramatic. This trend is found not only in urology (data from the AUA Census support this) but also in medicine as a whole, as the number of hospital-employed physicians has increased overall by 50% between 2012 and 2015, according to data released by the Physicians Advocacy Institute.

The reasons for this are obvious to anyone of us who has tried to run a business; both government requirements (think MACRA and MIPS) and insurance company policies favor large hospital systems. Further, the ability of larger systems to reduce overhead on back office staff as well as on supplies gives them an advantage. And medicine is by no means unique. The trend toward consolidation appears in just about every business; think about the small mom-and-pop shops competing against the likes of Walmart or Amazon.

Next: "Just as interestingly, a similar trend is occurring in academics"

Just as interestingly, a similar trend is occurring in academics. Thinking back 15 years to when I was a medical student, the academic urologists I knew were all “triple-threats”: phenomenal surgeons, renowned researchers, and stellar teachers of residents and medical students.

On the other hand, it seemed that every patient they dealt with was super complicated and most cases required big-time surgery. None of the academics I knew did bread-and-butter urology. The simple cases were left to the private practice urologists, and it was simply expected that the bigger cases would be referred to the academic centers.

So what changed? In a word, reimbursement. As state and federal funding for academic centers declined, hospitals had to think of ways to raise revenue, and a few clever centers decided to start directly employing urologists to do private practice urology. The best example I can think of, though I’m certain there are others, is Cleveland Clinic. We all know that Cleveland Clinic has world-class research and provides true cutting-edge surgery. What I didn’t know until a few years ago is that it started establishing Cleveland Clinic-branded outreach clinics throughout northern Ohio that are staffed with Cleveland Clinic-employed physicians.

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The advantage of this model is that not only does the Clinic have more control over referrals, but it also reaps the financial advantage of owning the private practice urologist. The model was so successful that nowadays, just about every major academic institution uses this model to some degree. In my backyard, the University of Colorado in Denver is actively buying up practices along the front range to increase its footprint. My group is no exception, as we were also approached (we declined).

Why does this matter? As you may know, I am a strong believer that physicians provide better patient care when they are involved in the business side of medicine. I realize some people disagree with that statement, and I understand their argument. There are certainly doctors who, because of their laser focus on the bottom line, allow money to dictate their care to the detriment of the patient. On the other hand, neither physicians, nor our patients, nor the health care system as a whole has unlimited resources, and understanding the costs of the treatments we provide, while working to minimize those costs where appropriate, makes the system stronger overall.

It is for that reason that I question the trend toward hospital-employed physicians, whether those physicians are employed by for-profit hospitals or academic centers. To be clear, I am not referring to those physicians who continue to practice what I consider to be “traditional” academic medicine. These physician-scientists need the freedom to explore their passion and to provide the incredibly complicated care they do without thinking about costs, and that likely means that we, as a society, need to find a way to fund them appropriately. Rather, I am referring to the employed physician who gets up in the morning, goes into the trenches of urology, and provides the same small-town, guideline-based medicine that I do.

Next: "Physicians need to understand the financial consequences of their decisions"

So long as we operate in a world with limited health care resources, physicians need to understand the financial consequences of their decisions as patients cannot bear this responsibility alone.

I am aware, though, that this trend will only continue for the simple reason that it makes financial sense. Interestingly, many large urology groups are now starting to emulate academic centers with doctors specializing in specific fields and more general urologists working in the trenches. Examples include North Shore Urology in Chicago, The Urology Group in Cincinnati, and Chesapeake Urology in Maryland.

I am also aware that I am not immune to the financial trends in medicine to which I am referring. My group is currently in the process of merging with the other urology group in town for the simple reason that we are stronger together.

What is the next step? Why simply have a large regional urology group if the model will work on a national level? Mayo Clinic has already done this (with branch hospitals in Jacksonville, FL and Scottsdale, AZ). Why not have a large private practice urology group, maybe even with the help of private money? Audax, a private equity group, just invested in Chesapeake Urology.

I don't have a crystal ball; my record at picking lottery numbers certainly supports that. But the trend toward larger more integrated health care systems seems obvious, and it is a trend that I do not think we, as a community, can avoid forever.