More Doctors Becoming Employees

NCPA, February 21, 2014

An increasing number of doctors are moving to salaried hospital jobs, says the New York Times.

• In 2004, physician placement firm Meritt Hawkins saw 11 percent of job offers filled involving hospital employment.
• Last year, that number skyrocketed to 64 percent.
• Over the next two years, Merritt Hawkins expects that figure to reach 75 percent.
• Rather than work independently, 60 percent of family doctors and pediatricians are classified as employees.
• The same is true for half of all surgeons in the United States and a quarter of all surgical subspecialists (earn, nose and throat surgeons, for example).

But will this move toward salaried doctors lead to lower costs? That question is unclear.

• One economist at Brandeis University, Robert Mechanic, says that he expects more expensive care to result, at least in the short run.
• Hospitals add a "facility fee" to procedures, so when private practice officers are purchased by a hospital, even a test performed in that office has that fee added on.
• Also, salaried doctors often receive a bonus based upon how much billing they generate. As a result, doctors could be incentivized to order more, and unnecessary, tests.

Efforts are being made across the board to change incentives that drive up health care costs.

• More employees and insurers, for example, have taken to paying health systems an annual, all-inclusive payment for each patient, regardless of how many tests are required. Unnecessary tests, therefore, end up costing the hospital money.
• Similarly, some hospitals are changing their bonus structure. Instead of awarding bonuses for billing, some hospital systems are awarding bonuses based on quality and effectiveness of care.

Merritt Hawkins president Mark E. Smith described the trend as a shift from a focus on volume to a focus on quality.

Source: Elisabeth Rosenthal, "Apprehensive, Many Doctors Shift to Jobs With Salaries," New York Times, February 13, 2014.