In recent years, the medical landscape has been littered with hospital-owned physician practices gone bad -- an ill-fated trend that led to rivers of red ink and considerable resentment on both sides.
Yet despite problems and financial horror stories of one failure after another, a new model of cooperation appears to be evolving between hospitals and physicians.
A different kind of collaboration -- based, surprisingly enough, on mutual respect and trust -- is one of the emerging priorities among physicians struggling with a long list of concerns in the new year. As always, it's topped by reimbursement issues and related priorities such as the constraints of managed care and the intrusion of federal regulation.
But the bottom line, so to speak, is that doctors are working longer and harder just to stay even with inflation.
"We project that's going to continue in 2001," says William Jessee, M.D., president of the Medical Group Management Association. "The concern it raises is: When do you reach the point where you can't run any faster?"
Jessee cited one recent report, by Merritt, Hawkins & Associates, which illustrates the results of this trend. In that report, about 75% of doctors age 50 and older expected their professional lives to be drastically changed over a period of one to three years -- either through retirement or a reduction of clinical roles, he says.
As usual, the villain is managed care, Jessee says. When doctors were asked in the Merritt, Hawkins survey what the main reason was for the expected cutback in their clinical roles, the majority cited managed care and its many complexities.
While the physician community continues its struggle with managed care, the forecast for many employed doctors has shifted considerably as many hospitals scuttle money-losing practices.
Yet not every hospital is getting out of the physician-practice business. Some are satisfied with the arrangement, especially those with contracts that emphasize performance incentives as opposed to a straight salary. Many hospitals are shifting their focus from primary-care physicians, once regarded as the vital gatekeepers, to the real profit centers -- the specialists.
Jeffry Peters, president of Health Directions, a Chicago-based practice-management company, says hospitals will continue to view physicians as "the major driver of patients, now that managed care is declining."
And, he said, there's a growing sense of optimism even among hospital-owned physician practices, the kiss of death a few years ago. A recent study by the MGMA shows losses for such practices declining at a rate of about 25% annually, to an average of about $60,000 per physician in 2000. That's a big difference from the average losses of about $100,000 in 1998.
"Hospitals are learning how to work with physicians, to manage practices and to do it on a break-even level," Peters says. "They've learned from their mistakes."
On the flip side, hospitals and hospital systems are finding a way to work effectively with private practices without owning them. That's especially true for ancillary services that are now moving from hospitals to private practices.
"The key is to strike some partnerships," says Craig Holm, a director of Philadelphia-based Health Strategies & Solutions, a management-consultant firm. "Whether they be joint ventures or joint operating agreements. If they're done right, the erosion of services (from the hospital) will be minimal."
Holm sees another significant development unfolding in healthcare: An increased realization among hospitals that the patient is a valued customer -- not just an expendable revenue stream.
"We're finding that hospital systems in particular are paying more attention to things like good patient service," he says. "We're finding that it's much more back in vogue to focus on good customer service."
Pressures from reimbursement issues, always a doctorly concern, will ease a bit this year, Peters says, because of the expected 4.5% increase in Medicare payments -- a trend that is likely to continue in the next couple of years. "I think there's beginning to be a recognition that doctors' income has really been artificially restrained."
Among other key issues on the horizon, unionization could make big news in the coming year. Congress failed to pass legislation last year that would have provided independent physicians with the right to bargain collectively with insurers. But proponents expect lawmakers to consider it again when the 107th Congress convenes in January.
There's also unionization efforts by residents concerned about benefits, wages and hours. Many experts expect that phenomenon to sweep across the country in the wake of a vote by the house staff at Lutheran General Hospital in Park Ridge, Ill. Votes in that election were impounded pending Lutheran's appeal to the National Labor Relations Board.
Meantime, doctors will be looking closely at the results of the Institute of Medicine's newest report on medical errors, expected to be released in February. One top official with a national medical group says he expects it to be as explosive as 1999's.