Thursday, July 15, 2010

Ten Practices for Increasing Hospital Profitability: Tip #7

As we proceed through the list of profitable practices, the trend of working with physicians continues. Four out of seven practices involve physicians.

Tip #7: Grow case volume by attracting new physicians to your facility

It is fairly straightforward that new physicians will bring in more cases and grow your profits. Depending on your market this may mean attracting new physicians to live in your community or just getting existing physicians who live in your community to support your hospital rather than the competition. To accomplish this you must really impress the physician with what you can do for them and their patients.

Getting the physician loyalty is not just a matter of throwing money at them. First of course there are Stark issues with paying physicians. But even those hospitals that have directly employed physicians physicians have gotten into financial trouble by not properly structuring their employment contracts. An extreme example is the hospital that built a large hospital based physician practice paying very attractive salaries to recruit top notch physicians. This resulted in a $6 million positive bottom line for the hospital. The problem was that the separate physician practice corporation that paid all the new docs lost $11 million the same year. Needless to say, the corporate structure could not sustain the net $5 million loss and there were dramatic changes the next year.

Attracting new physicians and building their loyalty is a complex and difficult process. Not all physicians are looking for the same thing. But it is safe to say that most of them today are looking for lifestyle over money as long as the money is still well in the market range. Many physicians today also want the security of employment. They are not trained in business and don't want the headaches and uncertainties of hiring staff and doing their own billing. This is why the pendulum has now swung back to more physicians entering an employment arrangement rather than going into private practice.

There are other considerations also such as the amount of call and whether or not hospitalists are available. Again, the physician may be willing to sacrifice some income to have more evenings and weekends available for his or her family. Also do not overlook integrating the physician to the hospital and his or her family to the community. It has often been said that to recruit the physician, you must win over their spouse. You want to not only bring the new physicians to the community but keep them satisfied with their decision for years to come.

More on profitability tomorrow.

Mark Brodeur

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