|Hospitals Buying Physician Practices And Employing The Doctors
Hospitals across America are employing an increasing number of physicians.
Based on analysis conducted by Pam Waymack, managing
director of and Evanston, Ill.-based Phoenix Services, the number of
physicians employed by community hospitals in 2006 (the most recent
year forwhich data is available) topped 80,000 physicians and dentists.
This number grew by 11 percent over the prior year and
has doubled over the past twenty years. Waymack notes, "Hospitals have
been quietly accumulating physician practices over the past few years.
As a group hospitals now employ a sizeable portion of the physician
Data available from the American Hospital
Association’s (AHA) Hospital Statistics 2008 show a total of over
113,000 physicians and dentists employed by hospitals across America.
These physicians represent about 13 percent of all physicians in the
country in 2005 based on the Phoenix Services analysis using the AHA
data and manpower projections from the Bureau of Health Professions.
Over 4,400 physicians and dentists were employed by
community hospitals in Illinois in 2006 and that number is growing.
Based on analysis by Waymack community hospitals in Illinois employ
over 10 percent of all practicing physicians in the state.
Over the past 20 years, the number of physicians
employed by community hospitals in Illinois has grown by 150 percent,
more than doubling the number of physicians employed by hospitals in
the state, said Phoenix Services.
The 78 community hospitals in the Chicago metropolitan
area employ over 3,700 of the physicians in the state. Looking at the
trend over time "area hospitals bought primary care practices in the
early 1990s as a managed care defensive strategy to lock in referrals.
Today these same hospitals are buying specialty practices as an
offensive strategy to build their depth of services. Many of our
clients are suddenly realizing that by acquiring a practice here and
employing a physician there, they suddenly have over 60 physicians and
a dozen or more practices that they are managing," Waymack observed.
Fewer physicians today are choosing to run their own
practice. This is a result of the financial pressures on physicians,
the complexity of running a physician business today and changing
lifestyle demands of today’s physician workforce, said Phoenix
The re-emerging trend of hospital employment of
physicians is indicative of strategies by community hospital executives
across the country, and in Illinois, to expand their profitable,
specialty service lines.
Community hospitals can be expected to continue to
employ a growing percent of the primary care and specialty physician
workforce to meet the business needs of hospitals. But these hospitals
must develop the infrastructure to manage the practices they acquire.
In the not too distant future, they will need to
demonstrate to physicians that they have a core competency in managing
practices, Phoenix Services predicted.
The real challenge according to Waymack has yet to be
reached, "With deep pockets, anyone can play in the physician
employment market today. But given physician manpower shortages, to
effectively compete for productive physicians, hospitals will need to
provide productive and professionally satisfying practices while
meeting the lifestyle demands that physicians want today."
Address: Phoenix Services Inc., 5800 Mnroe St., Suite D, Sylvania, OH 43560; (419) 885-2157, www.phoenixsvs.com.