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When physicians go to work for hospitals, what changes for the community?

Facilities argue the trend prepares providers for new payment models

Topics: Accountable Care, Market Trends, Strategy, ACO, Health Policy, Hospital-Physician Alignment, Physician Issues

September 06, 2013

Writing in the Greenville News this week, Liv Osby looks at how hospitals' efforts to acquire physician practices have played out in the community of Greenville, S.C.

The Greenville County Medical Society estimates that 70% of its 900 physician members are now working for hospitals. Although some worry that the trend could increase health costs, hospitals say that hiring physicians is an investment for the future that will ultimately bring down costs for patients. 

For some doctors, moving into a hospital organization is a necessity as payers increasingly focus on quality outcomes and cost containment, which can require significant investments from providers.

Greenville primary care physician Carolyn Fields is one such physician. After 28 years of running her own practice, she sold her practice to Bon Secours St. Francis Health System. Although she "didn't want to be bought," managing the practice was becoming more complicated and she "got tired of all that."

Now, Fields finds that many of her biggest workplace hassles have lessened, she is benefiting from the support of the health system, and she can provide better benefits to her employees. "I guess it was meant to be," Fields says.

How will the trend affect health costs?

The Medicare Payment Advisory Commission (MedPAC) says that the trend toward hospital-employed doctors may drive up costs because care that was once billed as physician visits will be billed at higher hospital outpatient rates—even when they occur in the same location. In addition, many hospitals charge facility fees for visits with doctors in their system.

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However, some health experts say that outcomes have improved under the new model and that costs will level off in time. MedPAC has already called for "site-neutral" payments for service typically offered in physician offices.

Meanwhile, hospitals will eventually do away with facility fees, Greenville Health System CMO Angelo Sinopoli predicts.

Bon Secours St. Francis Health System CEO Mark Nantz echoes the prediction. "There might be some short-term financial gain to be gotten, but we didn't think that would put us in a better position," he says of his system's decision not to charge the fees at acquired practices. He adds, "There could be a backlash of patients if it's more expensive. And at some point, we will compete on price competitiveness" (Osby, The Greenville News, 9/4).

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