As I travel across the Midwest and East Coast, healthcare leaders are talking cautiously about the future of healthcare and what the patient care delivery system will look like in the next decade. These are thoughtful leaders who understand that continued growth in the cost of healthcare will produce huge unfunded liabilities. They know that the federal government will continue to cut spending – Medicare provider payments – and that they must be prepared to reduce their operating between five and 10 percent of current Medicare payment rates.
While the economy is improving, the underlying challenges facing healthcare executives remain. There may be improvements in economic indicators, but healthcare CEOs will face another year of uncertainty. This uncertainty will contribute to continued inaction for many organizations.
There is evidence that large providers like HCA, Tenet, Life Point, and Community Health and many of the nation’s largest not-for-profit community healthcare systems and hospitals realize that the current hospital business model will change. They see the writing on the wall and they are already responding strategically and financially.
One telling strategy development is the accelerating trend of employing physicians. This is not the first time health systems and hospitals have skipped down this strategic pathway. The decade of the 1980s brought the notion that system integration was the golden key to the pathway of success. Some corporate executives who had successfully run hospital companies felt they could successfully roll up physician practices into a large corporation, and improve profitability through improved efficiencies and enhanced managed care contracting. The results were, for the most part, catastrophically bad. With one or two exceptions, most of the roll up physician practice companies failed, and hospital systems consistently lost about $100,000 to $150,000 per employed physician. The take away from this expensive experiment is that running a physician practice and a hospital are NOT the same thing. Those lessons, if well learned, will determine whether this time around we get it right.
The big companies and systems are well organized and are recruiting for employment physicians from hospitalists to family practice. They understand there will be a serious physician shortage and they are moving ahead of the wave. They are investing significant capital to get ahead of the curve, industry analysts say.
The move to physician employment, hospital CEOs agree, reflects a broader challenge: an across-the-board war for talent in every market.
That is why an organization’s recruiting brand – how they recruit and relate with employees at all levels – is so important. It is why onboarding with gold-plated recruiting processes will be more important than ever in the new decade.