Many not-for-profit hospitals and health systems are revisiting physician employment models, a strategy that sent some down in flames in the mid-1990s, according to a report by credit-rating agency Moody's Investors Service.
But this time around hospitals appear to be more prudent and disciplined in their physician integration strategies, and Moody's expects to see more moves by hospitals to integrate more closely with doctors over the next two to three years.
The drivers behind today's strategies are different: Hospitals are hoping to build market share while physicians are looking for income stability in an environment where compensation is declining and malpractice insurance is problematic, Moody's said. Also, hospitals continue to be at risk of losing key clinical service lines to physician-owned facilities.
Moody's said it expects that "the nearly ubiquitous presence of physician-owned ambulatory centers will only continue to increase."
As a result, if such hospital-physician integration strategies are well managed, they could be at least a neutral or even a positive credit factor, helping to bolster a hospital's financial performance and market position, Moody's said.