Study: Hospital-owned physician groups losing money

ctruman@herald-leader.comMarch 22, 2013 

Hospital-owned physician practices around Kentucky are losing as much as $100,000 per doctor each year, according to a report by the accounting and consulting firm Dean Dorton Allen Ford.

The costs of maintaining comprehensive care under upcoming health care changes might mean that more patients would be treated with long-distance remote care and technological advances, such as diagnostic robotics, according to the principal authors of the report, Gary Ermers and David Bundy.

The report will be widely released Monday. It includes data from 26 health care executives representing 79 hospitals.

The hospitals are not identified in the study but represent a mix of rural and urban settings.

Ermers and Bundy said the way health care is provided in Kentucky might need to change, given the state's long-term shortage of physicians, particularly in rural areas.

"The Affordable Care Act in particular is changing the game, and makes building a well-integrated network essential," the report said. "However, if hospitals are to continue with this strategy, they must rapidly improve physician operations and narrow the immense losses physician groups are now incurring."

The report also said:

■ The longer a hospital has employed physician groups, the higher the likelihood that it is experiencing operating losses for those groups.

■ The more physicians who are employed, the more likely operating losses become.

"In the current environment, more tests and procedures mean more profit for the hospital, but in the future, as hospitals are compensated on measures of population health, they will actually experience more financial losses from the cost of these procedures."

■ Physician groups operating as separate legal entities have the highest losses. The report stated that having the physicians' group set up separately might result in the risk of losing control over operations.

It concludes that the way physicians are paid should be more flexible, and it recommends that doctors be made to understand their responsibility for building a business as well as caring for patients.

■ Adding physicians might require a different approach to improve hospital finances.

Under the Affordable Care Act, the study says, "the number of specialists needed may not be so great. Organizations will have to balance clinical need with the need to maximize population wellness."

Said Bundy: "Health care reform is trying to line doctors and hospitals up in one continuum. ... These entities need to learn to work cohesively and in a financially sustainable model."

Cheryl Truman: (859) 231-3202. Twitter: @CherylTruman.

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