A Physician’s Notes
The Wave of Physician-Hospital Integration: How Will it Affect Incentives? 

By John E. Brush, Jr., MD, FACC

In recent years, there has been a wave of physician-hospital integration, particularly in subspecialties such as cardiology. Medaxiom, a company that tracks the business side of cardiology, reports that hospital systems have acquired over 30% of cardiology practices, and 48% of practices are considering integrating with a hospital system. As large health systems gobble up independent practices and as physicians are absorbed into a corporate culture, how will this trend toward greater integration affect physician behavior? A central question is: Will the corporate culture replace the traditional doctor-patient relationship?

Before this wave of integration, physicians maintained a fierce independence. Frequently, in fact, doctors have been criticized for being too independent and not being team players. But for years this independence has provided an informal form of regulation. Historically, doctors have been required, for example, to attest to the need for each inpatient admission, providing a check against unwarranted hospitalizations. Also, through various committee and medical staff activities, doctors occasionally have demanded that hospital administration adequately address the needs of patients and not stint on care.

In some ways, the tension between the medical staff and hospital administration has been constructive, allowing doctors and administrators to challenge each other to ensure that we are providing the best care for patients. Will integration eliminate that tension, and if so, what will be the consequences?

Traditionally, doctors have been imbued in their training with a healthy respect for the doctor-patient relationship. Although this tradition is not always followed and is not explicitly defined, the primacy of the doctor-patient relationship provides a moral compass guiding a doctor's behavior. Working for a hospital could create interests that are in conflict with the primary concerns of the patient, especially in light of the incentives built into the fee-for-service payment system. It is possible that doctors could feel a greater obligation to keep hospital beds full, reduce length of stay, choose drugs and devices based solely on cost, or adhere to other motivations that are not in the patient's best interest.

In anticipation of newer payment models that bundle payments or that pay under the rules of accountable care organizations, the potential advantages of integration are obvious. More teamwork and alert co-management should create a greater focus on quality improvement and cost containment. In this age of accountability and value-based purchasing, hospitals are eager to get doctors on their side and hope to create incentives for doctors that are more aligned with the incentives of the hospital and to create shared responsibility and risk.

Therefore, the question will be: Will physician-hospital integration create incentives that improve care, or will we replace the current mal-aligned incentives with a new set of mal-aligned incentives? Will integration help providers adapt to newer payment models, and if so, at what cost?

John E. Brush, Jr., MD, FACC, is a cardiologist with Cardiology Consultants, Ltd., in Norfolk, Va., and a member of HCI3's board of directors. He can be reached at jebrush@earthlink.net.