Scott Gottlieb,  former official at the Centers for Medicare and Medicaid Services, recently wrote a rather stinging critique of the healthcare legislation in a Wall Street Journal column. He foresees insurers pushing providers to accept lower fees as a result of the insurers themselves dealing with new price constraints. More to the point for Repertoire readers, he made this statement:

One of the few remaining ways to manage expenses is to reduce the actual cost of the products. In health care, this means pushing providers to accept lower fees and reduce their use of costly services like radiology or other diagnostic testing.

To implement this strategy, companies need to be able to exert more control over doctors. So insurers are trying to buy up medical clinics and doctor practices. Where they can’t own providers outright, they’ll maintain smaller “networks” of physicians that they will contract with so they can manage doctors more closely. That means even fewer choices for beneficiaries. Insurers hope that owning providers will enable health policies to offset the cost of the new regulations.

Doctors, meanwhile, are selling their practices to local hospitals. In 2005, doctors owned more than two-thirds of all medical practices. By next year, more than 60% of physicians will be salaried employees. About a third of those will be working for hospitals, according to the American Medical Association. A review of the open job searches held by one of the country’s largest physician-recruiting firms shows that nearly 50% are for jobs in hospitals, up from about 25% five years ago.

In the upcoming June issue of Repertoire, we take a look at “Tomorrow’s Physician Practice,” and how many hospitals and health systems are lining up to buy physician practices, and frustrated docs are more and more willing to take a pay check rather than control every facet of their practice. Almost to a person, doctors resent the hours they spend on administrative duties — the type of work that running any small business demands — instead of doing what they were trained to do, namely, improving people’s health.

 

What are some of the main reasons docs are looking into buyouts? Repertoire explores this in an upcoming feature:

In short, for many reasons, they eye with envy their colleagues who have sold their practices to the local hospital system. Yes, they realize those colleagues are no longer the captains of their ship. But, they have to admit, their colleagues seem content, focused on providing medical care instead of filling out paperwork and insurance claims. They can’t help but notice that their colleagues have access to outstanding, modern medical technology; have managed to make a big dent in their student loans; and, yes, have their evenings and weekends free.

 

Look for more on this in the June issue and future issues of Repertoire.

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