Increasing trend in Hospital Employment: Impact Physician Billing

Health care reform, widely anticipated federal Medicare reimbursement cuts and a variety of changes in the physician workforce, are fueling more and more physicians to move under the hospital’s umbrella. Hospitals employees are expected to increase in the next ten years considerably with 85% of physicians likely to be hospital employees. A survey by the Society for Healthcare Strategy and Market Development indicated that health care leaders across the nation believe the percentage of physicians on hospitals’ active staffs who are employed will increase to 25% by 2013.

U.S. hospitals are also responding to the implementation of health care reform by accelerating their hiring of physicians and more than half of practicing U.S. physicians are now employed by hospitals or integrated delivery systems. However, shifting from private practice to hospital employment can adversely affect a physician’s billing in a number of ways and employment decisions made by physicians today will have long-term repercussions for the practice and management of medicine.

Impact on Physician compensation

  • Patients who were formerly only billed a professional fee by their physician may now need to pay an additional facility fee charged by the hospital. This may reduce patient volume and therefore physician compensation
  • Hospital may convert certain current in-office ancillary services billed as hospital-based services, which may increase patient costs; moreover out of pocket costs for patients may also increase. Patients may decline ancillary services or obtain them elsewhere, lowering physician bills
  • Referrals from a physician affiliated with a competing hospital may be lost by specialists, decreasing patient count and compensation

Hospitals lose $150,000 to $250,000 per year over the first 3 years of employing a physician – owing to the process of doctors transiting their practices, establishing themselves and adapting to management changes. Nevertheless, survey by the Medical Group Management Association depicts nearly 75% rise in the number of active doctors employed by hospitals since 2000. The survey also revealed that 74% of hospital leaders planned to increase physician employment within the next 12 to 36 months. Hospitals are now targeting both PCPs and specialists.

Despite the adverse affects on billing, recent hospital announcements suggest the trend of physicians seeking hospital employment is accelerating; in this case physicians contemplating hospital employment should keep themselves well informed about the hospitals agreements and negotiate to mitigate those effects causing lower compensation. Physicians transiting to hospital employment need support from other professionals. has in-depth knowledge and expertise in the delivering the best quality services to hospitalists. Hospital employment will affect patients, hospitals and doctors, healthcare will require greater coordination, greater use of clinical data, and collaborative provider teams — which MBC is best positioned to deliver. MBC is the largest ‘Consortium of Medical Billers and Coders, servicing over 50 specialty physicians, across the US.

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