In my January 2011 column (“A Seller’s Market: How to prepare your practice for sale to a hospital”), I described the growing trend of physicians selling their practices to hospitals and large health systems and then working for the hospital or health system. This trend is expected to continue in full force through 2012. As I noted in my January article, the physician’s post-sale arrangement is the driver for the growth of the physician’s practice within the hospital or health system.
Explore this issue:November 2011
In the physician-affiliation arrangement, there is a worrisome trend in the compensation models offered by hospitals in which the hospitals are shifting their financial risks to individual physicians. I have recently reviewed a number of contracts that contain provisions that hold the physician personally responsible for the success or failure of his or her practice within the hospital or health system.
In a financially strong year with high patient billing and collection rates and efficient hospital management processes, this language may prove financially beneficial to the physician-employee, through bonuses and distributions. In a year with low collections coupled with aggressive allocation of overhead expenses, however, this language could become a damaging clause in an otherwise attractive contract.