Hospitals' Race to Employ Physicians — The Logic behind a Money-Losing Proposition

U.S. hospitals have begun responding to the implementation of health care reform by accelerating their hiring of physicians. Understanding the economics of these decisions will help physicians to anticipate the evolution of their employment situations. U.S. hospitals have begun responding to the implementation of health care reform by accelerating their hiring of physicians. More than half of practicing U.S. physicians are now employed by hospitals or integrated delivery systems, a trend fueled by the intended creation of accountable care organizations (ACOs) and the prospect of more risk-based payment approaches. Whether physicians, hospitals, or payers end up leading ACOs will depend on local market factors, competitive behaviors, and first-mover advantage, but employment decisions made by physicians today will have long-term repercussions for the practice and management of medicine. 1 In the 1990s, hospitals acquired many physician practices . . .