Hospital Bidding War for Private Physician Practices

There is no doubt the new healthcare climate is affecting physicians across the United States.  According to Merritt Hawkins, a leading physician placement firm, 64% of new healthcare job offers were from hospitals.  This percentage will increase to 75% in two years compared to only 11% of offers in 2004.  Elisabeth Rosenthal makes this case in her New York Times article, "Doctors are now the employees rather than the employer.

This significant change in healthcare employment will undoubtedly affect the patient as hospitals rapidly purchase individual physician practices and medical groups.  Physicians are even more inclined to sell when hospitals are paying a premium for these practices. According to Robert Mechanic, an economist who studies healthcare at Brandeis University, “From the hospital end there’s a big feeding frenzy, a lot of bidding going on to bring in doctors, and physicians are going in so they don’t have to worry — there’s a lot of uncertainty about how health reform is going to play out.”

Also important to keep in mind, Medicare has reduced its fees to providers for certain procedures over the last few years, in some cases the reductions have been over 50%.  This new norm has physicians questioning the fee for service payment model as a whole. Mark E. Smith who is president of Merritt Hawkins states that “the question now is how to shift the compensation from a focus on volume to a focus on quality.”

To view this New York Times article in its entirety click here

Image via Katherine Taylor for the New York Times