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Hospitals nearing 'saturation' on doc hiring

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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 group, 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 that hospital employment of physicians is rising in all of those markets, but started sooner and has proceeded further in Indianapolis, Cleveland and Greenville, S.C.

“Hospitals see physician employment and tighter alignment not only as a way to capture more specialty and hospital referrals in a fee-for-service payment system, but also as central to building the clinical and financial integration needed to succeed under potential new payment models, such as accountable care organizations (ACOs), that involve risk-sharing and reward quality and efficiency,” center staff members wrote.

Over the last three years, all major hospitals in Indianapolis have been active 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.

Many hospitals in the 12 markets have reported that physicians are initiating discussions about employment or close affiliation arrangements.

“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.

Physicians who had developed their own surgery centers or imaging centers have been selling these facilities to hospitals or entering joint ventures with hospitals. A big reason is that physician-owned facilities are no longer allowed to grow under provisions in the health reform law, called the Patient Protection and Affordable Care Act.

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

“Hospitals were using an array of strategies to gain the loyalty of physicians choosing to remain independent, including providing physicians with administrative and health plan contracting support and offering financial and administrative support for electronic health records implementation,” the center reported.

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  1. Aaron is my fav!

  2. Let's see... $25M construction cost, they get $7.5M back from federal taxpayers, they're exempt from business property tax and use tax so that's about $2.5M PER YEAR they don't have to pay, permitting fees are cut in half for such projects, IPL will give them $4K under an incentive program, and under IPL's VFIT they'll be selling the power to IPL at 20 cents / kwh, nearly triple what a gas plant gets, about $6M / year for the 150-acre combined farms, and all of which is passed on to IPL customers. No jobs will be created either other than an handful of installers for a few weeks. Now here's the fun part...the panels (from CHINA) only cost about $5M on Alibaba, so where's the rest of the $25M going? Are they marking up the price to drive up the federal rebate? Indy Airport Solar Partners II LLC is owned by local firms Johnson-Melloh Solutions and Telemon Corp. They'll gross $6M / year in triple-rate power revenue, get another $12M next year from taxpayers for this new farm, on top of the $12M they got from taxpayers this year for the first farm, and have only laid out about $10-12M in materials plus installation labor for both farms combined, and $500K / year in annual land lease for both farms (est.). Over 15 years, that's over $70M net profit on a $12M investment, all from our wallets. What a boondoggle. It's time to wise up and give Thorium Energy your serious consideration. See http://energyfromthorium.com to learn more.

  3. Markus, I don't think a $2 Billion dollar surplus qualifies as saying we are out of money. Privatization does work. The government should only do what private industry can't or won't. What is proven is that any time the government tries to do something it costs more, comes in late and usually is lower quality.

  4. Some of the licenses that were added during Daniels' administration, such as requiring waiter/waitresses to be licensed to serve alcohol, are simply a way to generate revenue. At $35/server every 3 years, the state is generating millions of dollars on the backs of people who really need/want to work.

  5. I always giggle when I read comments from people complaining that a market is "too saturated" with one thing or another. What does that even mean? If someone is able to open and sustain a new business, whether you think there is room enough for them or not, more power to them. Personally, I love visiting as many of the new local breweries as possible. You do realize that most of these establishments include a dining component and therefore are pretty similar to restaurants, right? When was the last time I heard someone say "You know, I think we have too many locally owned restaurants"? Um, never...

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