Hospitals employing more physicians as a long-term investment

About half of all physicians are employed by a hospitals or an integrated delivery system, but unlike the hiring spree in the 1990s that fizzled out, this trend is likely to have a long-standing affect on healthcare, according to “Hospitals' Race to Employ Physicians — The Logic Behind a Money-Losing Proposition” in the March 30 New England Journal of Medicine. For starters, hospitals lose money for the first three years that they employ a physician, so they are likely to do what they can to make the relationship work. Second, changing payment structures may make it more difficult for physicians to venture back out on their own if the relationship with the hospital goes bad. Despite these apparent downsides, the long-term strategic benefits are worth it.