Can Hospitals Exist Without Doctors?

“One cannot run a hospital without doctors, and one cannot run one with them.” – Peter F. Drucker

Yesterday Kaiser Health News ran a piece titled “Hospitals Clash with House Republicans on Medicare Cuts.”

The article revived these questions:

·Are hospitals friends or foes of independent physicians?

·Will the future of hospital-doctor relationships be one of cooperation, collaboration, or cooptation? (On the last bullet point, “cooptation” means hospitals take over the practice of medicine).

·What is the role of hospitals in health reform – hospitals after all have already agreed to $155 billion in Medicare cuts under Obamacare?

But I digress. What is the hospitals’ problem with the Republican legislation? What is the big deal? The Senate will probably not even take up the bill up anyway.

Simply this: Hospitals would have to pay $17 billion of the $38 billion required for the “doctor fix,” a 2 year reprieve from the 27% Medicare doctor pay cuts.

How? Starting in 2013, the bill would lower the hospital Medicare payments the government now pays for uncollected bills, copays, and deductibles and for the administrative costs devoted to collecting these unpaid items.

Hospitals say this additional cost burden would be devastating. Uncollectibles are soaring because of the recession, diminished state Medicaid funding, and a 2% cut due the “sequester” in the wake of the failed budget bill.

The hospitals’ hostile reaction to the Republican legislation raises these questions.

What is the basic attitude of hospitals toward independent doctors, who may practice largely outside the hospital environment but who may depend on hospitals for their work and livelihood?

If the 27% cut goes through, can hospitals live without doctors who will no longer accept Medicare or Medicaid patients?

Answers to these questions may be moot, i,e.not relevant in the present practice environment.

Many of the doctors who cease or cut back on practices will be older independent doctors who practice outside of hospitals.

Many will go into cash-only practices, concierge practices, walk-in clinics, and urgent care centers outside of the province of hospitals.

Many, especially younger or mid-career doctors, will become hospitalists, ER physicians, or employees of hospital-owned practices.

Academic centers or large hospital systems or doctor driven- systems already employ 10% to 12% of physicians.

Many primary care doctors will work for government-sponsored Community Clinics, which already care for 20 million Americans.

Some of the practice vacuum will be filled with physician extenders – nurses, nurse practitioners, and physician assistants.

Many doctors may be working within the context of accountable care organizations (ACOs) – in which doctors will be paid to care for large defined populations of Medicare patients and will be required to follow a series of complicated bureaucratic rules.

Richard L. Reece is a retired pathologist and the author of The Health Reform Maze: A Blueprint for Physician Practices. He blogs about health reform, medical innovation, and physician practices at medinnovationblog.

1 reply »

  1. You have accurately pointed out that the new generation of physicians tend not to be independent physicians who practice outside the hospital or are not part of practices contracting to hospitals.

    Thus, the more pertinent question in my opinion is whether those contract groups, or the hospitals themselves will be willing to squeeze the physicians in order to maintain their margins in the face of the government cuts, or if the hospitals will improve their practices and efficiencies in order to preserve physician pay.

    It seems to me that the temptation will be great to cut physician pay (easy to do) rather than improve efficiencies (harder to do). Longer term, however, you get what you pay for.