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Hospitals may be near saturation point on physician hiring

June 4, 2011

Indianapolis may be reaching a saturation point for hospitals employing physicians, according to the latest report from the Center for Studying Health System Change.

The not-for-profit, based in Washington, D.C., published its latest insights on May 26, gleaned from 12 markets around the country, including Indianapolis. The report noted that hospital employment of physicians is rising in all those markets, but the trend started sooner and has proceeded further in Indianapolis, Cleveland and Greenville, S.C.

Hospitals see physician employment not only as a way to capture more referrals of patients, but also as key to building the collaborative organizations necessary to take advantage of new payment methods from health plans that ask hospitals to bear more of the financial risk of keeping patients healthy, according to the authors of the report.

Over the last three years, all major hospitals in Indianapolis have been active in hiring physicians. There was a mad dash for cardiologists, including St. Vincent Health’s 2010 purchase of The Care Group and Community Health Network’s acquisition of most of the cardiology practices working at its Indiana Heart Center hospital.

Community now employs more than 550 physicians. And both Indiana University Health and Franciscan Alliance noted in their 2010 financial reports a substantial increase in salary and benefit expenses due to physician hiring.

In late 2009, the OrthoIndy physician practice sold a minority stake in its Indiana Orthopaedic Hospital to the St. Vincent Health hospital system.

“Physicians in most markets—faced with financial pressures, difficulties recruiting younger physicians who often prefer employment in larger organizations, and growing uncertainty about the future under health reform—were more actively seeking the stability and security of employment in larger physician-owned or hospital-owned groups,” the report said.

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