ECRI: Hospitals are snapping up physician practices, and not without risk

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Hospitals and health systems across the U.S. are shopping for doctors, plunking down dollars on existing physician practices and new MDs “at a fast clip” since 2005, according to a new report from ECRI Institute.

In “Risk Managers Tackle Challenges of Hospital-Acquired Physician Practices,” published in ECRI’s April 2012 Risk Management Reporter newsletter, the care-improvement nonprofit points out that, between 2005 and 2008, physician practices owned by hospitals doubled and, by 2008, nearly 50 percent of medical practices were owned and operated by hospitals.  

The bulk of the article is aimed at helping hospitals reduce the risks associated with such acquisitions, and its numbers account for its timing. The piece cites a recent survey by the Medical Group Management Association revealing that, by 2010, the number of new physicians who joined hospital-owned practices exceeded the number of first-year practitioners who joined physician-owned practices.

“Even in states like California and Texas, where laws prohibiting the ‘corporate practice of medicine’ do not allow hospitals to employ physicians, hospitals and physician practices are becoming closely tied through contractual arrangements,” the report reads.

The report notes that the spending spree has been spurred by several factors, not least among them healthcare reform: The Patient Protection and Affordable Care Act requires hospitals to have affiliated physician practices in order to develop accountable care organizations.

Hospital leaders need to be well prepared to identify and manage liability and patient safety risks, ensure that a high quality of care is provided in the acquired practices and monitor patient satisfaction, ECRI said by way of announcing the release of the newsletter. “Risk managers, who are responsible for implementing risk reduction strategies, must understand key executive decisions regarding practice acquisition, physician hiring and how practice acquisition impacts risk management functions,” it added.

ECRI is offering the article, produced by the organization’s risk-control membership program, free of charge to members and non-members alike.