Three years ago, independent physicians ruled the roost at Medical Center Health System, a 403-bed community hospital in Odessa, Texas. At that point, the health system employed only half a dozen physicians, mostly primary care docs who doubled as hospitalists. Today, the employed medical staff numbers 30, encompassing both radiology and anesthesiology. And the number is going to keep growing, says Gary Barnes, CIO. "When we're recruiting medical staff, we try to bring in private physicians first, but more and more, they want to be hospital-employed," he says.

The reason? For Barnes, the answer boils down to one simple fact: Running a private group practice, of whatever size, is increasingly a difficult undertaking, one that fewer and fewer physicians are keen on doing. "If you come in as an employed physician, we can take care of the billing and the medical records, and you can practice medicine instead of trying to manage a business and make a profit."

The time-honored arrangement of physicians running private practices is rapidly giving way to direct employment arrangements with hospitals and health systems-and in some cases, even health plans. Delivery systems are buying group practices and physicians are looking to sell. The I.T. implications are profound-hospitals participating in the practice acquisition boom have found that integrating physicians and their practices' technology is no simple feat. Ironically, moving a paper-based group practice into the digital era may be a simpler undertaking than integrating an acquired practice already digitized.

"Economic instability among physicians is a huge driver in the decision to give up private practice," says Lisa Bielamowicz, M.D., national physician practice leader at The Advisory Board Company, a Washington, D.C.-based consulting firm. "I have never seen independent physicians more concerned about their ability to maintain a solvent practice. There is more red tape and big increases in capital costs. I.T. and meaningful use are a huge part of that."

Hospitals looking to build out an employed base of physicians invariably need them connected via an electronic health record. But the rapid push to acquire physician practices is creating new challenges for the I.T. department. The transition calls for careful management, which is not always easy in a rapid growth mode. "It is not unusual in some areas to see an entire market shift in 18 months to 24 months from physicians being completely independent to employed," says Bielamowicz.

Interestingly, it's young physicians who are reluctant to strike out on their own. According to the American Medical Association, the younger the physician, the more likely they will steer clear of the entrepreneurial role-and long hours-associated with private practice. While nearly 70 percent of physicians age 55 and older are self-employed and one quarter are employees, less than 50 percent of physicians under age 40 are self-employed, and a near equal number are employees, according to AMA research.

Further, AMA surveys found that in 2008 just over 60 percent of physicians were self-employed, with the remainder employed either by group practices or hospitals. A similar survey conducted by Accenture and released last June estimates that by 2013, less than one-third of physicians will be independent.

The reason I.T. has been an increasingly important factor in physicians seeking hospital employment is that tomorrow's outcomes-based reimbursement models will reward care coordination, and that level of coordination necessary for burgeoning accountable care organizations requires a sophisticated-and expensive-I.T. infrastructure.

Health Data Management’s May Cover Story from Gary Baldwin, “Shopping Spree the Price of I.T. Progress?” examines the issues and challenges as more physicians become hospital employees.

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