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Physician employment: Panacea or poison?

Medical Staff Briefing, April 1, 2010

This is an excerpt from a member only article. To read the article in its entirety, please login or subscribe to Medical Staff Briefing.

Many medical staff and hospital leaders believe that employment is a panacea for misaligned incentives that currently characterize physician-hospital relationships. However, it is easy to overlook the downsides or enter into poorly constructed employment agreements that leave neither physicians nor the hospital satisfied. The bottom line is that physician employment can relieve some symptoms of misalignment if implemented correctly, but it is not a cure-all.

It is important to understand the factors that contribute to a physician's decision to become an employee of a hospital. These include:

• Physicians' desire to practice medicine rather than run a business. Many physicians do not wish to be bothered with the management and financial hassles of running a practice. For many physicians, the hassle factor diminishes their joy of practicing medicine.  
•  A volatile financial environment. Employment arrangements offer physicians a sense of financial security. This is particularly important to many graduating physicians who are saddled with large student loan obligations.
• Declining physician incomes. Physician incomes have not kept pace with inflation thanks to increasing malpractice insurance fees and decreasing reimbursement. Some physicians prefer to reduce their overhead by becoming hospital employees.

This is an excerpt from a member only article. To read the article in its entirety, please login or subscribe to Medical Staff Briefing.

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