September 20, 2016; Fierce Healthcare

We have seen philanthropy and nonprofits take any number of “wrong ways” over the years, guided by the latest set of attractive assumptions that despite being untested can be adopted widely because someone’s logic model says they make sense. When faced with a “bold new move,” we had better be prepared for failure and adjustment, knowing that in some cases, people are harmed in implementation. In this case, no one was harmed, but no one appears to have been improved either.

A study published in the Annals of Internal Medicine finds that there is no difference in the quality of patient outcomes whether a doctor is employed by a healthcare system or engaged in independent practice. Considering that there are about 5,000 hospitals in the U.S., the study’s analysis of 803 hospitals with a physician-employed model and 2,085 hospitals without employed physicians is a very large sample. Reports on the study do not disaggregate nonprofit hospitals, but since about a fifth of all hospitals are nonprofit, it’s reasonable to assume they are well represented in the study.

NPQ has written frequently and at great length on the emerging model of healthcare epitomized by the Affordable Care Act, or Obamacare. One key to the ACA’s integrated healthcare delivery service model is the “medical home,” where patients receive near-comprehensive healthcare services (dental care being one notable exception). Nonprofit hospitals across the country have been combining into healthcare systems that include multiple hospitals, clinics and physician practices, health insurance companies, and even for-profit related ventures. There are two main goals of this market-based and ACA-inspired activity: 1) decrease costs for patients and the third parties (government and insurance companies) through large-scale cost efficiencies and a focus on paying for wellness promotion rather than fee-for-service, procedure-based healthcare; and 2) improve health and health outcomes for patients through standardization on best practice in comprehensive healthcare services.

The center of healthcare for most people is the need to visit a doctor. Most doctors are still owners of their own practices, but about a quarter of all physicians are now employed by a hospital as part of a healthcare system, and that number is rising. Younger doctors, especially, are attracted to the employed physician model. If there is no difference in outcome quality between independent physicians and those employed by healthcare systems, what’s happening?

Two things. First, it’s still in the early days for the integrated healthcare delivery model, so we’re not seeing many of the anticipated benefits yet. Second, the employment of physicians by hospitals was never designed to improve patient quality except in a derivative sense (as reimbursement moves to wellness promotion, payment-driven focus on outcomes quality should increase). Instead, the hospital-employed physician model has gained popularity because it’s believed to be more cost-efficient than independent physician practices due to the scale efficiencies of large systems and variations in the quality of business acumen between independent practices.

Efficiency comes at a price. Some hospital-employed doctors report discomfort at being subjected to hospital-imposed performance and production standards that reduce their authority to determine patient care and penalize them for spending “too much” time with patients.

The researchers wrote, “Our study, which used contemporary national data, suggests that a fundamental improvement in care delivery will require more than mere changes in hospital-physician integration, and if physician employment is a key ingredient, it must be linked to other key goals, such as hospital prioritization of quality, to be successful.”—Michael Wyland