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[image: Your daily Update] January 17th, 2012 How hospitals are

gaining leverage over

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How hospitals are gaining leverage over physicians

by Reece, MD

<http://www.kevinmd.com/blog/post-author/richard-reece>| in

Policy <http://www.kevinmd.com/blog/category/policy> |

http://www.kevinmd.com/blog/?p=62091 " >no responses* *

*Most hospital managers have never had the power to exert leverage over

their most valuable resource, the physician, who, after all, admits the

patients who make the hospital’s economic existence possible in the first

place.*

* *So I wrote in introducing a chapter in my first book in 1988. I hastened

to add, however, at the close of that chapter, these admonishments:

1. The economic powers of the hospital is shifting from those who provide

care – to those who pay for it – government and business.

2. This shift is forcing hospital administrators and medical staff to

discuss how to use hospitals wisely without destroying quality.

3. Hospitals and physicians are losing their monopolies on inpatient

services both had taken for granted – diagnostic testing, surgery,

emergency care, and even routine deliveries – and now must consider

investing together in alternative delivery systems outside the hospital.

4. Administrators of voluntary hospitals and private physicians are

beginning to understand that the health care marketplace can be cruel –

forcing them to depend on one another and compelling them to sit down

together to decide future priorities.

At this point, I could chortle, quoting Lord Byron,” Of all the horrid,

hideous tales of woe, is that portentous phrase, ‘I told you so’.” I could

even cite my book as proof I was right from the very beginning.

But alas, I overlooked something elemental. The course of events over the

last 24 years has shown that hospitals are steadily gaining leverage over

physicians, not the other way around.

These events include: increasing complexity of the system, need to

negotiate complicated contracts, systematic decline in physician

reimbursements, growth of mega-hospital systems, persistent growth in

malpractice premiums, utilization reviews requiring physicians to justify

testing and procedures, demands for expensive information technology

systems, and the growing awareness that teams of experts are necessary to

manage technologies, to market services, and to deal with rules and

regulations of health reform.

* *

Leverage is a fragile, malleable thing.

*

It depends on public trust.* And, as the late F. Drucker (1909-2005)

observed, this trust in increasingly invested in large organizations,

“Every single social task of major impact is increasingly entrusted to

institutions which are organized for perpetuity and which are managed by

professionals, whether they be called managers, administrators, or

executives.”

*It depends on management.* As Victor Fuchs, a Stanford economist and

proponent of universal health care, noted,

“The most significant battleground is between practicing physicians and

management. By that I mean inevitable clash between a fiercely independent

profession and a management system system that seeks firmer control over

what physicians do.”

*It depends on who owns whom.* In the last 5 years, there has been a

precipitous decline in physician-owned practices, from 75% to less than

50%. Much of this decline can be attributed to physicians, who – weary of

overwork, dropping incomes, practice hassles, loss of autonomy, and

malpractice worries – have become hospital employees. When someone else

pays your salary, you do they want you to do – or else. I have a

technophobic internist friend, whose practice was bought out be a hospital

chain. The chain insisted he enter all patient data into an EMR. He retired.

*It depends on administrative competence.* To function in today’s

competitive environment with its rules, regulations, and legal and

government compliances, one needs an administrative team with the means of

acquiring capital, marshaling technological resources, implementing

information systems, auditing performance, continuously improving quality,

coordinating care, and negotiating and dealing with public and private

bureaucracies. Most private practices cannot do this myriad of tasks

without organizational backup.

*It depends on politics*. It depends on June Supreme Court decisions on

Obamacare, on November elections outcomes, on local and regional elections,

and on hospital-physician politics.

*It depends on physician leadership and personal options.* Collaborative

physician-led integrated hospital and health systems tend to be successful.

But so too do independent and entrepreneurial physicians who own their own

facilities, who drop out of third party arrangements to create cash-only or

concierge practices, and who seek other medical careers or new ventures

offering more convenient, improved, and less expensive care.

via

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