https://www.kaufmanhall.com/insights/thoughts-ken-kaufman/physician-employment-model-continued

From time to time the blogging process stimulates a conversation between the author and the audience. This type of conversation occurred after the publication of my recent blog, “The Hospital Makeover—Part 2.” This blog focused entirely on the current problems, financial and otherwise, of the hospital physician employment model. I received responses from CEOs and other C-suite executives and those responses are very much worth adding to the physician employment conversation. Hospital executives have obviously given the physician employment strategy considerable thought.

One CEO noted that, looking back from a business perspective, physician employment was not actually a doctor retention strategy but, in the long run, more of a customer acquisition and customer loyalty strategy.

The tactic was to employ the physician and draw his or her patients into the hospital ecosystem. And by extension, if the patient was loyal to the doctor, then the patient would also be loyal to the hospital. Perhaps this approach was once legitimate but new access models, consumerism, and the healthcare preferences of at least two generations of patients have challenged the strategic validity of this tactic.

The struggle now—and the financial numbers validate that struggle—is that the physician employment model has become extraordinarily expensive and, from observation, does not scale.

Therefore, the relevant business question becomes what are the most efficient and durable customer acquisition and loyalty models now available to hospitals and health systems?

A few more physician employment observations worth sharing:

• Primary Care. The physician employment model has generally created a one-size-fits all view of primary care. Consumers, however, want choice. They want 32 flavors, not just vanilla. Alternative primary care models need to match up to fast-changing consumer preferences.
• Where Physician Employment Works. In general, the employment model has worked where doctor “shift work” is involved. This includes facility-based specialists such as emergency physicians, anesthesiologists, and hospitalists.
• Chronic Care Management. Traditional physician employment models that drive toward doctor-led physical clinics have generally not led to the improved monitoring and treatment of chronic care patient problems. As a result, the chronic care space will likely see significant disruption from virtual and in-home tools.

All in all, the four very smart observations detailed above continue the hospital physician employment conversation. Please feel free to add your thoughts on this or on other topics of hospital management which may be of interest to you. Thanks for reading.