Feasibility and implementation of a hospital-based group practice

All sectors of the economy have been suffering from the current inflationary environment. In some businesses, such as health care, costs have increased more than thought possible in the past. Since hospitals are labor intensive, they have been drastically affected by the push toward higher pay and the often hidden cost of fringe benefits. It is not surprising, therefore, that in seeking relief from the cost, hospitals will examine a method which removes a large part of the salary burden from their budgets: conversion of hospital-based salaried physicians to private, fee-for-service groups. The first article in this two-part series, which appeared in Medical Group Management, November/December 1981, examined the financial and legal aspects of the conversion. This concluding article presents the operational and organizational issues which must be considered for a successful conversion.