Physician efficiency and reimbursement: a case study

Joint ventures between hospitals and doctors are being widely developed and reported as the most promising mechanism for building alliances, providing financial rewards, and accessing new markets. However, joint ventures cannot be structured to involve an entire medical staff directly. Likewise, they cannot motivate a medical staff to change medical practice patterns in order to improve a hospital's reimbursement efficiency. This article describes a system of physician economic efficiency criteria that is being used by one hospital in making medical staff reappointment decisions and has the effect of placing all physicians at risk individually for the hospital's reimbursement performance. Although somewhat controversial, this economic efficiency program has proven a remarkably effective tool for change.