A New Model Of Physician Employment Emerges

By Andrew A. Ziskind, Kristin L. Ficery and Richard N. Fu

Most Baby Boomers in the United States came of age in an era of healthcare when it was not uncommon for physicians to own their own practices, work long hours and treat their patients—often singlehandedly—from birth into adulthood. That time has passed. The implications of this trend go well beyond the physicians and hospitals—and patients—themselves.

A recent study from the New England Journal of Medicine found that the number of physicians who are "truly independent" has been declining at a rate of about 2 percent since the turn of the millennium. Accenture analysis predicts that the decline will reach 5 percent annually by 2013 (see chart). By that point, less than one-third of US physicians will remain truly independent. One physician recruitment firm notes that 51 percent of the positions it filled in the past year were for hospitals, up from 14 percent eight years ago. And even a growing share of the jobs the company filled in private practices included income guarantees from hospitals.

However, hospitals also face a number of critical risks as they move toward more direct employment of physicians. First, the finances are not always rosy. Hospitals can lose $200,000 or more per year over the first three years of employing physicians as doctors transition their practices and adapt to a new environment.

Several different scenarios are possible over the coming years as physicians, hospitals and related enterprises throughout the ecosystem jostle for position. Hospitals may proceed aggressively in courting physicians, permanently altering the employment landscape. On the other hand, physicians may actively seek hospital-based employment but the institutions themselves may be constrained by regulatory and economic factors. Accenture believes the mostly likely scenario at this time is one of "maximum integration," with a spike in acquisitions and direct-hire recruiting of physicians. In this scenario, both parties see integration as key to survival in a reformed healthcare delivery model.

By preparing for the future today, the full range of stakeholders stand a better chance of navigating successfully through this more challenging healthcare marketplace.

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