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medpundit |
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Sunday, May 18, 2003A decade ago the trend in healthcare business was for hospitals and physician management companies to buy up physician practices. Physicians saw it as a chance to have someone else deal with the headaches of running a practice - negotiating with insurance companies, making sure licensing fees and hospital staff dues got paid on time, taking care of payroll and accounting, and managing the practices employee- while still making a decent salary. It was often promoted (and still is) as freeing the physician to practice medicine. Hospitals saw it as a chance to gain a captive audience for their services - not just hospitalization but other ancillary services such as physical therapy, X-ray, cardiac and neurological diagnositcs, etc. There was also a widespread belief that these networks would save money and be more profitable than independent physician practices because of “economies of scale.” But economies of scale are only beneficial if they outweigh the inefficiences of scale. And in hospital-run physician practices the inefficiencies are legion. The wages of an entire layer of administrative personnel have to paid - personnel that would not be used at all in a private practice. Many hospitals require their physician practices to buy drugs and vaccines through the hospital pharmacy, often at prices far above those to be had on the open market. Because hospital networks are large employers, they have to provide retirement, disability, and health insurance for all of their employees - benefits which most private practices can’t afford. Hospital-owned practices also have to submit to an array of oppressive rules for everyday operation. Hospitals may require their physician practices to use the more expensive single-dose vials of drugs and immunizations because that’s what’s used in the hospital, although the less expensive multi-dose vial would be more appropriate in the office setting. They may accept insurance plans that reimburse well for inpatient care but that are dismal payers for outpatient care. They may prohibit autoclaving of surgical instruments and require a practice to either give up minor surgery (skin biopsies, mole removals, etc.) or to use expensive disposable equipment. In fact, working in a network system is akin to working under the colonial economic system of 18th century America. The mother country (the hospital) makes all sorts of unreasonable economic demands on its colonies (the physician practices) and only offers in return the promise of paternalistic government. Now, the tide is turning. Physicians realize that they practice medicine best when they’re in control of those important day-to-day decisions and when their staff answers to them rather than some remote adminstrator. And hospitals, eager to improve their bottom lines in these tough economic times, are divesting themselves of their practices at ever increasing rates. Some call the process “disintegration,” but I prefer to think of it as liberation. posted by Sydney on 5/18/2003 12:09:00 PM 0 comments 0 Comments: |
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