Hospitals Woo Physicians Away from Private Practices

Article excerpt

The fight between health care giants Highmark Inc. and UPMC is fueling a race to gobble up private physician practices in Western Pennsylvania.

Doctors are essential to the financial success of health systems, experts say.

"The hospitals can't admit patients without physicians," said Jordan Battani, an expert with CSC Healthcare Group, a consulting company in Falls Church, Va. "No one goes there unless they're directed by an ambulance or a provider."

At the same time, changes in national health care policy are pushing doctors to link up with large organizations, said Dr. Frank Civitarese, president of Preferred Primary Care Physicians, a 31- doctor private practice based in Scott. Technology demands, cuts in Medicare payments and pressure from large organizations to sell make it "absolutely more challenging" to remain independent, Civitarese said.

"I think it'll remain to be seen whether we as an independent medical group can continue to push the envelope" of providing quality care while investing in technology and people, he said.

Each doctor can bring millions of dollars annually to a health system, according to a 2010 study by Merritt Hawkins, a physician search and consulting company in Irving, Texas.

On the low end, a pediatrician can generate more than $850,000 a year for a hospital while earning a salary of $171,000, the study shows. On the high end, a neurosurgeon can be worth more than $2.8 million in hospital revenue while earning $571,000 a year. In the middle are family practice doctors, which earn $173,000 on average but can generate more than $1.6 million a year for a health system.

For that reason, Highmark and UPMC aren't the only ones in the hunt. Smaller systems around the region recognize the importance of physicians to their bottom lines.

Jameson Health System in New Castle, with eight employed physicians, intends to hire 20 doctors by 2015, said Patty Eppinger, director of medical staff services.

In 2010, Jameson's leaders noticed two trends that led the hospital to begin recruiting doctors, Eppinger said. Many of the private practice doctors in the New Castle area were nearing retirement age and patients increasingly were traveling to other hospitals for treatment.

"As a small community hospital, you need admissions," she said.

Highmark, the state's largest health insurer, needs doctors because it's seeking to prop up financially ailing West Penn Allegheny Health System and create a medical services organization to compete with UPMC, the region's dominant hospital and physician network.

By 2013, fewer than one-third of American physicians are predicted to remain independent of a health system, down from 57 percent in 2000, according to Accenture, a New York consulting company. Western Pennsylvania is there, with an estimated 30 percent or less of its doctors in private practice. In Allegheny County, it may be as low as 25 percent, the county medical society said.

For doctors, employment with a large organization can be a blessing or a curse, depending who you ask.

"I think it really compromises the integrity of medical care," said Dr. Scott Tyson, CEO of Pediatrics South, a 10-physician private practice in the South Hills. "This has become an industry ... not focused on patient care."

On the other hand, some physicians tire of running a business and sell their practices to a hospital system for "the sigh of relief that they can just take care of patients," said Dr. …