The Rise of Physician Employment and Considerations for Medical Staffs

The Rise of Physician Employment and Considerations for Medical Staffs
Senior Director of Corporate Compliance

I’d like to share with you some highlights from one of my favorite sessions that I attended this summer at the 2013 American Health Lawyers Association’s Annual Meeting.  Janice Dinner of Banner Health and Karen Owens of Coppersmith, Schermer & Brockelman delivered a very insightful presentation on “Hospital Employed Physicians: How Medical Staffs are Coping with the New Reality.”  While there are many articles and papers out there that highlight the growing trend of physician employment, this presentation took us deeper than the typical high level view. It got into the weeds of the practical challenges that Medical Staff offices and HR departments face when turning to a physician employment model.

Dinner and Owens first looked at several physician motivations behind the trend. Why would doctors prefer to become employees of hospitals when their traditional relationship with hospitals is one of appointment, where a physician is granted access to a facility to treat patients and receives privileges to perform specific procedures?  The presenters noted that employment, as opposed to maintaining their own practice, allows doctors greater resources to take on such challenges as electronic health records, regulatory burdens like HIPAA/HITECH compliance, Medicare billing compliance and it likely would allow for more predictable hours as well. What about hospitals?   What are the benefits for hospitals that employ physicians? The presenters considered that while previous attempts at physician employment have not been entirely successful for hospitals, in addition to satisfying other needs, the hospital would have greater “assurance of physician coverage” and increased “control over quality of care.”

The presentation also examined the peer review process and how it’s affected by the rise in employment. Medical peer review is basically the process by which a committee of physicians examines and assesses the work of a fellow practitioner regarding matters of quality of care.  The presenters raised questions about the complexities of information sharing in the context of employment.  Confidentiality is critical in the peer review process. It has long been argued that the assurance of confidentiality promotes candor in the peer review process.  When medical mistakes happen, how can those involved discuss it constructively?  Would the protection of confidentiality remain in an employment context?  

Perhaps at this point you’re wondering why I’m so interested in physician employment if the space I work in is specifically healthcare background checks. As you know, PreCheck performs background checks on physicians for many of our Medical Staff clients. In addition to simply taking interest in what our clients do, I consider the impact to screening with this shift towards employment. Let me conclude by highlighting the presenters’ points on the reporting of employment decisions relative to issues of quality and conduct:

  • Negative employment decisions are not reportable to the National Practitioner Data Bank (NPDB). The Healthcare Quality Improvement Act of 1986 (HCQIA) created the NPDB with the goals of improving health care quality, reducing fraud and abuse, and protecting the public.  The Data Bank collects and compiles specific information (e.g. medical malpractice payments, adverse licensure actions including revocation and suspension, adverse clinical privileging action, health care related criminal convictions, etc.), important information about medical practitioners that organizations such as hospitals and other health care entities are authorized by law to query.  Organizations that must report adverse information about healthcare practitioners to the Data Bank include hospitals, peer review organizations, state licensing boards, medical malpractice payers, etc.  The list of adverse items of information is very specific, and it must be noted that it does not include employment decisions.  So what happens to the effectiveness of the NPDB when the physician is an employee and details about his termination due to quality of care issues cannot be reported to the Data Bank?
  • Additionally, the presenters note that depending on state law, Medical Boards may or may not require reporting of employment actions. 
  • And finally, with regard to references and the amount of information that is shared between hospitals today, employment references are likely to be more limited. The result would be hospitals potentially making less informed hiring decisions.

So while it’s not the current reality, it is true that more and more physicians are becoming employees of hospitals.  At her own organization, Dinner revealed that in six years, Banner Health increased its employed physician population from 217 to 907.  Indeed, we heard from an expert who lived to tell about the challenges and struggles they faced. And while not all hospitals have the same approach to physician employment, but both Dinner and Owens concede: It’s a brave new world where “uncertainties prevail,” along with “opportunities and risks!”