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    Physician Employment - The Other Capital Expense?

    October 11th, 2006

    By: Craig Allan Ahrens
    The Business of Healthcare
    A talk show and discussion forum dedicated to the strategic issues impacting the business of healthcare

    It is like "Back to the Future" all over again...by the way who said that quote because I have been using that a lot lately. Anyway, physician employment is getting really, really hot again as a strategy for health systems. It is interesting because many of the lemmings that jumped into employment in the 90s jumped back out. However, for the lemmings that I know who didn't leap off the mountain after taking the first plunge, some have gotten very good at managing the employment of physicians. What is even more interesting is that the organizations that I am aware of who have pulled physician employment off well have for the most part solidified their strategic positions in their respective markets. Well, if you employ your distribution channel and run it effectively, then it is pretty hard to crack. Right?

    Believe me I am not waving the flag of employment for everyone. More than most, I am intimately aware that each market has its individual quirks. The competitive pressures that led to physician employment by hospitals are different today than in the 90s. Back in the good old 90s, everyone thought managed care was coming and the chickens listened to chicken little and started the massive primary care employment trend. The providers that did a good job of managing those physicians have realized advantages against today's competitive pressures that many did not anticipate years ago.

    Today, the competitive pressure are not a "coming soon" fear like in the 90s; rather they are a reality forcing systems to strongly pursue employment. Some examples include:

    1. Declining physician reimbursement by the government.
    2. Increased outpatient competition by physicians.
    3. High cost of malpractice insurance.
    4. Physicians' desire to "have a life".
    5. Severe shortages in key specialties.

    I'm sure there are a multitude of other reasons and I look forward to your thoughts. Maybe hospitals should start putting a line item in their financials called physician capital expense? :)

    By the way, look for the next podcast on the "The Business of Healthcare" website or on the Itunes store under the Business of Healthcare. Our guest will be Parveen Chand, who is a facilities and business development planning executive for BJC Health System's Barnes Jewish St. Peter's hospital in St. Louis, Missouri. We will be discussing their innovative approach to facilities planning and budgeting. It should be uploaded by Wednesday October 11th, 2006.

    If any of you have any ideas, people, or topics that you think that would be interesting for the "The Business of Healthcare" podcast, please email me at info@thebusinessofhealthcare.com.

    Thank you.

    If you have Itunes on your computer, click here
    If you don't have Itunes, go straight to "The Business of Healthcare" blog

    Most recent podcasts:

    Show 7: Roundtable Discussion with Three Healthcare Leaders: Strategic Issues - A Midwest, East Coast and West Coast Perspective
    Show 6: Service Line Success and the Strategic Impact of the Rebasing of DRGs
    Show 5: Orthopedic Service Line Planning
    Show 4: Neurosciences Planning for Healthcare Institutions
    Show 3: Human Resources as the Critical Hospital Strategic Partner?
    Show 2:Patient Satisfaction and Customer Service as a Hospital's Strategic Priority
    Show 1: Surviving and Thriving as an Independent Hospital in a Competitive Market

    Mr. Ahrens is a healthcare strategy consultant at ECG Healthcare's Midwest office with expertise in general hospital strategic planning, operational turn-arounds, physician business development, and service line planning. You can reach him at info@thebusinessofhealthcare.com.

    Comments, Pingbacks:

    Comment from: Nensy Cooper [Visitor] · http://listline.org
    In 2000 Physician jobs and surgeon jobs numbered about 572,000. During this time 6.7 out of 10 career opportunities were in office-based practices and about 2.3 out of 10 were employed by hospitals. The remaining physician jobs were for the Federal Government, most in U.S. Department of Veterans Affairs hospitals and other government related areas. Physician salaries have continued to grow during this time.

    Today, many physicians are partners and open group physician practices. Organized as clinics or as groups of physicians, they will pool their resources and can offer the public more advanced physician services. The need for new physicians has been growing every year and may continue to grow well into the future much like the need for nursing jobs has exploded.
    Permalink 02/19/07 @ 15:15
    Comment from: Scott Brison [Visitor] · http://starjournal.org/
    If your business manufactures products or purchases them for resale, you generally must value inventory at the beginning and end of each tax year to determine your cost of goods sold. Some of your expenses may be included in figuring the cost of goods sold. Cost of goods sold is deducted from your gross receipts to figure your gross profit for the year. If you include an expense in the cost of goods sold, you cannot deduct it again as a business expense.
    Permalink 02/27/07 @ 15:50
    Comment from: John Cusack [Visitor] · http://www.analogstereo.com/alfa_romeo_owners_manual.htm
    Today, many physicians are partners and open group physician practices. Organized as clinics or as groups of physicians, they will pool their resources and can offer the public more advanced physician services. The need for new physicians has been growing every year and may continue to grow well into the future much like the need for nursing jobs has exploded.
    Permalink 08/14/07 @ 22:06
    Thanks for sharing your article! Indeed, employment has been affected by the changes in our economy. Not only physicians are affected but also the other sectors of our society. With the economic recession being experienced nowadays, investing for extra money will always be hard to achieve. The health sector including its dependents, the patients, are also experiencing this economic dilemma. For example, those mothers who had given a multiple pregnancy to 8 newborns. How can she and her family invest for the expenses of her labor and birth? A payday loan won’t be enough to cover this cost, as the $3 million cost of the birth is getting billed to the state. In the natural world, the odds of a human giving birth to octuplet is about 1 in 20.97 trillion, and the odds of survival are slim, as most multiple births past quadruplets have intrinsically very low survival rates.
    http://personalmoneystore.com/moneyblog/2009/03/09/expensive-octuplets
    Permalink 03/17/09 @ 01:05
    Comment from: Alex [Visitor] · http://www.drjobs.us/
    Small groups and clinics are the future if they somehow will be able to win the fight against insurances
    Permalink 04/15/09 @ 15:37

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