Got Docs? Hospital-Owned Physicians Post Equal Risk - DoctorsManagement Got Docs? Hospital-Owned Physicians Post Equal Risk - DoctorsManagement

Got Docs? Hospital-Owned Physicians Post Equal Risk

By Frank Cohen, Director of Business Analytics | July 8, 2015

As originally published by Racmonitor. com

In 1986, when I was in charge of physician services for a hospital in Connecticut, we were buying up physicians like crazy in an effort to control referrals and admissions to our hospital. We were, at that time, in competition with two other hospitals in the same community. This was prior to Stark and prior to the feeding frenzy we now see in the form of the Centers for Medicare & Medicaid Services (CMS) recovery audits. Ahhh, those were the days. In fact, the resource-based relative value scale (RBRVS) was not yet a reality, we were using the old E&M codes (anyone remember 90020?), and recovery audits were pretty much restricted to outright and obvious fraudulent activity.

Fast forward to today: What is different? Well, it seems hospitals are still in the mood to own physicians (especially PCPs) in order to control referrals and downstream revenue. And the exploration of ACOs has been a driving factor in the past few years. What’s different now, however, is that we are bound under a very complex and confusing set of rules and regulations that didn’t exist 20 or 30 years ago. And these have fueled a fever of audits and reviews aimed at taking back the moneys that were paid to healthcare providers in prior periods.

By some accounts, hospital-employed physician numbers have risen from some 5,000 at the turn of the century to nearly 50,000 today. The “why” behind hospitals purchasing physicians and physician groups runs the gamut, but the reasons are irrelevant to this article because, in the end, irrespective of the motivation to build, the risk is the same. Pretty much every hospital physician exec I have known or worked with invests quite a bit into the financial aspect of due diligence before they purchase a doc. How many patients a day does s/he see? What does the fee schedule look like? In what shape are the managed care contracts? What is the staffing ratio? How much does the doc make? How are expenses distributed? And much, much more. But what about risk? What kind of risk is the hospital purchasing, and just how does that liability affect the value of the purchase?

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