The CFA Perspective

The CFA Perspective: Physician/Hospital Integration and Pushback

Posted by Peter Rastello

4/22/11 11:55 AM

If hospitals are going to align with physicians, most, given the ability, might choose to employ every physician on their medical staff.  However, in many cases, hospitals and health systems will end up with alignment strategies that encompass physician employment, arrangements including joint ventures, co-management agreements and other hybrids, combinations and permutations that have yet to be dreamed up!  The healthcare field is simply too complex to produce a one-size-fits-all circumstances solution.  Some physicians will choose to reject alignment and compete – or accept alignment elsewhere and compete!  The future medical staff will be a hybrid along the alignment continuum and look very different than it does today.

Cardiovascular Team Another reality of an alignment strategy is pushback and other forms of retribution or overt competition on the part of some members of the medical staff towards the hospital that is promoting alignment.  Physicians who are non-aligned (through their own choice or through “non-selection”) may view this strategy as exclusionary, discriminatory, and anti-competitive, and take legal or other actions against the hospital, its administration, and/or other members of the medical staff.  Legal action, redirection of referrals and non-participation in hospital business or clinical activities has occurred.  Some physicians have gone into open competition with their aligned colleagues and with the aligning hospital.


Hospitals have taken a very diverse approach to pushback and competition.  A hospital may take the high road on competition, believing that its alignment approach will ultimately create a relationship that is more valuable and sustainable than one where physicians go into competing enterprises:  they simply wish them good luck and try to ignore them.  Other hospitals have taken a hard line, denying privileges to physicians that invest in or take their patients to competing facilities such as heart hospitals.   One hospital took a serious hit in patient referral volume when some staff cardiologists decided to punish it for establishing a California-legal medical foundation by filing a lawsuit to overturn the foundation and referring patients to other local programs.  At the time the foundation was started, it had no cardiologists as members and the local cardiologists were invited to participate!  The hospital was then put in the position of having to recruit new cardiologists to serve the community and rebuild the cardiovascular program.


Physicians may have opportunities to participate in multiple joint ventures with competing hospitals or systems.  Most hospitals will make them choose sides without coercion or threat – just persuasion based on the mutuality of interests.


Pushback isn’t just about nonaligned physicians.  For example, if an aligned group of cardiologists practices at more than one hospital, what happens when the competing hospital (or hospitals) shuts them out of call schedules, directorships and the like?  Should this have been anticipated during the integration process by the parties?  And how should their compensation package account for this likely scenario, if at all?


As has been said many times, healthcare is messy and complicated.  Any hospital contemplating an alignment strategy must consider the potential negative consequences of action by non-aligned staff and develop appropriate strategies to deal with these actions.


As always, CFA welcomes your comments, suggestions and questions.