Amid the growing healthcare policy uncertainty, some hospital leaders are saying “stop” to new hiring, one industry analyst says.

June 5—The share of physicians who work in a practice with at least some hospital ownership or who are direct hospital employees has remained unchanged since 2014, according to an analysis based on physician surveys.

The latest edition of a regular report by the American Medical Association (AMA) found stabilization in the trend toward hospital employment of physicians. Specifically, the share of physicians who work in a practice with at least some hospital ownership or who are direct hospital employees was 32.8 percent in both 2014 and 2016. That stabilization followed steady increases in earlier years, such as an increase from 29 percent in 2012.

Direct hospital employees accounted for 7.4 percent of physicians in 2016, which was a similar share to 2014 but higher than the 5.6 percent who were directly employed in 2012.

Physicians in multispecialty practices were more likely to report hospital ownership, with 43.6 percent employed by hospitals, compared with 22.8 percent in single-specialty practices.

The AMA authors cited reports that the hospital-hiring slowdown stemmed from organizational decisions to focus on better aligning recently hired physicians and acquired practices.

“Just because you’ve purchased a group practice or a hospital has acquired all of these other physicians, they aren’t necessarily well-organized to work together easily,” said Clese Erikson, deputy director of the Health Workforce Research Center at The George Washington University, who studies physician workforce issues.

Despite the continued movement toward value-based care and alternative payment models that many credit with driving hospital hiring of physicians in recent years, logistical challenges can slow integration of those hires[. For instance, acquired practices may have different and noncommunicating electronic health records in relation to the acquiring hospital and thus require a costly and time-consuming switch to a complementary system, Erikson noted.

But the growth in hospital employment remained apparent in data from other sources.

For instance, the massive Physicians Foundation survey found 34.6 percent of respondents were hospital-employed in 2016, compared with 30.5 percent in 2014.

“There’s room to go, at least in our numbers,” said Travis Singleton, senior vice president of Dallas-based recruiting firm Merritt Hawkins, which conducts the Physicians Foundation survey. “The younger providers certainly have made their stance known—they want to be employed, want to work typically for a larger organization, and they’ve shown very little desire to own and operate their own practice.”

The Foundation report credited that trend to physicians who seek the security of an assured income at a time when physician payment models are in flux and private practices worry about how they will be paid or whether revenue will be sufficient to cover expenses.

“Employment also is thought to lessen the regulatory and compliance burden private practice physicians face, while providing them with the financial support and technical expertise needed to implement mandated use of information technology,” according to that report.

“Others are really struggling to figure out their role in some of these payment efforts and don’t even know what MACRA [the Medicare Access and CHIP Reauthorization Act of 2015] means, what that stands for, and how it could impact them or how to negotiate their salaries under those sorts of conditions,” Erikson said in an interview.

The continuation of the hospital employment trend was seen by others, such as Moody’s Investors Service, which noted in a March report that expected further increases in physician employment would continue to put pressure on for-profit hospital margins.

“Further, as companies continue to employ more physicians in order to drive volumes, salaries, wages, and benefits will increase as well,” Moody’s analysts wrote.

However, Moody’s noted that some health systems have yet to see significant physician recruitment costs yield a commensurate increase in volume.

Hiring Slowdown

The possible slowdown in hospital hiring of physicians comes as the latest federal employment data indicate that hospital hiring of all types of personnel continued a 2017 slowdown after surging in 2015 and 2016.

Hospitals added 7,400 employees in May, up from 3,700 in April. But those figures were both well below the 12-month average of 11,600 for 2016, according to an Altarum Institute analysis.

The 2017 hospital-hiring slowdown likely stems from healthcare policy uncertainty, Singleton said.

“I know from talking to them that they prepared their hospitals and possibly staffed for an environment that they’re not even sure will exist anymore,” Singleton said, referring to coverage expansion under the Affordable Care Act, which has been targeted for reversal; MACRA implementation delays; and changing Medicare penalties. “It’s understandable where the health systems are saying at a minimum, ‘OK, stop; we’re not going any further until we know where we’re going.’”

And that slowdown was reflected across the healthcare sector.

Ani Turner, co-director of the Center for Sustainable Health Spending at the Altarum Institute, said in an email that the May 2017 healthcare job growth “is consistent with what we have seen in the first five months of 2017–health care is still adding jobs, but at about two-thirds the rate seen in 2015 and 2016 (22,000 new jobs per month in 2017 versus 32,000 in 2015 and 2016).”

“We see slower growth in both hospitals and ambulatory settings,” Turner added.

Where’s the Growth?

A growth area identified in the AMA report was in the share of physicians employed by a practice, which increased from 41.8 percent in 2012 to 47.1 percent in 2016. Last year also was the first in which there were equal shares of physician-employees and physician-owners of practices.

Additionally, 24.6 percent of physicians practiced in multispecialty groups in 2016, a slight increase from 22.1 percent in 2012.

There also were signs of a gradual shift toward larger practices. For instance, 13.8 percent of physicians were working in practices with 50 or more physicians in 2016, an increase from 12.2 percent in 2012.

Meanwhile, the Physicians Foundation survey noted that some of the largest physician group practices have reached the scope and scale of hospital systems, from which they may be indistinguishable.

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Tuesday, June 06, 2017