Strength in numbers. Hospitals that encourage group practice development may have a strategic advantage in the 1990s

Group practices have become increasingly popular among physicians in recent years. And as competition increases and operating margins become perilously thin, hospitals with significant group practice participation among medical staff appear to be in an enviable position. Before deciding to promote group practices, however, hospital managers should be become familiar with their advantages and disadvantages and determine whether a market exists for group practice development at their facility. The advantages for hospitals include more effective recruiting and a more stable patient base. Among the disadvantages are the fact that groups give physicians a stronger power base from which to request concessions from the hospital and that a preponderance of group-affiliated physicians on staff may discourage referrals from nongroup physicians. A number of considerations are involved in preparing for and coordinating group practice development. In the planning stages open communication with physicians is critical. Physician leaders and a cross section of active staff should participate. Planners should discourage formation of "groups without walls," in which hospitals manage group practices of physicians who remain at different sites. A hospital may, however, choose group-like arrangements (e.g., limited partnerships) without necessarily promoting group practice. Hospitals may also help a group purchase a facility of its own or even create the facility and allow the group to build equity in it.