What Do I Owe? 

                No, this is not going to be a message about the national debt. Instead, I want to focus on the complex question of the evolving physician-hospital relationship. Since the history of this question was “current events” to me, I want to do a short review. In the “old days” membership on the medical staff was granted at no cost, and one’s obligation was mainly to provide care for your patient. Neither the hospital nor the physician made any money from the hospitalized patient, and the whole thing was seen as mainly a charitable initiative on the part of both parties. This is what lies behind the notion of the voluntary medical staff system in place when I started to medical school.

                After the introduction of Medicare, though, both hospitals and physicians began to make money from the care of hospitalized patients. Concurrently the number of procedures that could be done increased, nursing became more of an educated profession, and the costs of hospital care began to go up. If the care cost more money, the hospital just sent the bill to the insurance company or the government and it was paid.  Membership on the medical staff required the occasional staff meeting and covering the emergency room. Since both parties were making a lot more money than had been the case previously, these duties were not seen as particularly onerous. 

                In the mid-1980’s, the government, concerned about the explosion of entitlement spending for medical care,[1] instituted prospective payment that changed the incentives for hospitals, which now needed a lot of short admissions to prosper. Simultaneously, many procedures that formerly required an inpatient stay of several days became outpatient procedures. The initial rate of reimbursement did not crimp hospital finances, and doctors really did not have to change the way they practiced. Both tended to shift the cost of care to private insurance payers. 

                Private insurance companies responded to this cost-shifting with the managed care experience. While this experiment collapsed, it did result in per-diem payment rates and denials of continued stay. At the same time, physicians were being subjected to increasing scrutiny by payers about their “quality.” Physicians, of course, realized that the payers really meant who was cheaper, not who was better, and became increasingly cynical about gaming the system. The net effect of all these changes is that hospitals became increasingly involved in trying to control their medical staff’s clinical decision making as “getting it right” had a major impact on the bottom line.

                We actually missed some of the early efforts of this sort, as our administration was convinced that the majority of the hospital’s costs were fixed, not variable, and that growing volumes would overcome any individual patient’s shortfall. They also became aware that outpatient surgery revenues drove a lot of the margin, but that the medical staff was often operating competing centers. This led to direct economic competition between members of the medical staff and the hospital, which led to a breakdown in the social compact underlying the voluntary hospital system, not only here, but nationwide.

                In the past several years, though, the government has again intervened and has begun moving in the direction of preventing physician ownership of facilities that bill the government for anything other than direct physician services. Given the growth of uninsured and underinsured patients, this has negatively impacted physician incomes and has caused most physicians to try and reduce the amount of uncompensated time they spend anywhere, including the hospital. At the same time, the government has become increasingly specific in the requirements placed on hospitals and their medical staff in terms of care processes and outcomes and expect hospitals to insure that “quality care” is provided to government beneficiaries. Thus, hospitals now need physician services to meet care expectations set by the government at the same time physicians are less able to donate time and services. This is what I see as the state of affairs now, and is illustrated by the conversation we had at the January medical staff meeting.

                The hospital is feeling increasing financial strains, and administration still thinks physicians ought to do many things as part of having “free” access to the hospital to make money. Physicians, on the other hand, are also facing financial pressures and balancing of work and home life. Consider the debate about reading echocardiograms. Cardiologists have special training to read these studies, but they are also expected to respond to the ED for patients with acute MI’s, see the consults in the hospital, and also to do outpatient follow up. They do get paid for the professional component of the study if the patient has insurance, but payment is not conditional upon exactly when the study is read. Hospitalists, and other physicians, though, need the echo results to document systolic dysfunction in patients with congestive heart failure and make sure they get good scores for taking care of these patients and keeping the length of stay short.

                So what are we to do? The short answer is, I don’t know. Yes, I do think physicians need compensation for meeting service needs of the hospital, but I don’t think hospitals owe physicians a living. So how much do I owe? I do know that as long as the question is about me, whether me is a physician or an administrator, there is no solution.  Perhaps if we could shift the question to what does the patient need, we might be able to establish a new social compact.  Is it possible to strike a reasonable balance? What do you think?

Written 6 February 2011, revised 4 May 2014.


[1] Yes, that was 25 years ago, and the arguments in today’s papers and blogs are more or less the same as they were then.

Further Reading

Trust in Physicians and Healthcare Reform
Public trust in physicians as a group is quite low, despite the high regard patients have for their personal doctor. The implications for the physician's role in the health care reform debate are considered.

Restoring the Commons
 A consideration of the interactions of patient preferences, evidence-based medicine and peer review.   

The Public Looks at Healthcare Reform

The Tragedy of the Commons
Recognizing the Commons is critical for success in an era of rapid change.

What Business Are We In? 
All healthcare organizations have both a clinical and a business function.  The proper balance is crucial for success.