Integration of cardiologists with hospitals: Effects on physician compensation and productivity
Vance M Chunn1, Bisakha Sen, Stephen J O'Connor
1Vance M. Chunn, DSc, is Chief Executive Officer, Cardiology Associates of Mobile, Inc., Alabama. E-mail: vchunn@cardassoc.com. Bisakha Sen, PhD, is Professor, Department of Healthcare Organization and Policy, University of Alabama at Birmingham. Stephen J. O'Connor, PhD, is Professor, Department of Health Services Administration, University of Alabama at Birmingham. William F. Jessee, MD, is Managing Director and Senior Medical Advisor, Integrated Healthcare Strategies, and Adjunct Professor, Department of Health Services Administration, University of Alabama at Birmingham. Joseph Sasson, PhD, is Vice President-Strategic Initiatives, MedAxiom, Inc., Neptune Beach, Florida. Amy Yarbrough Landry, PhD, is Associate Professor, Department of Health Services Administration, University of Alabama at Birmingham.
Insights
Hospital employment of cardiologists leads to higher compensation and lower productivity. This study found that integrated cardiologists earn significantly more but complete fewer work relative value units (RVUs).
Area of Science:
- Healthcare Economics
- Physician Practice Management
- Health Services Research
Background:
- Hospital-physician vertical integration, particularly employing cardiologists, has risen significantly.
- Concerns exist regarding reduced competition and concentrated provider bargaining power due to this consolidation.
- Hospitals may incentivize cardiologist integration through higher compensation and reduced workloads.
Purpose of the Study:
- To analyze differences in compensation and clinical productivity (work RVUs) for cardiologists transitioning from independent practice to hospital employment.
- To quantify the financial and workload changes associated with cardiologist integration.
Main Methods:
- Quantitative, retrospective, longitudinal analysis comparing integrated and independent cardiologists.
- Utilized data from the MedAxiom Annual Survey (2010-2014).
- Included 4,830 unique cardiologists and 13,642 physician-year observations, analyzing ownership status, compensation, and work RVUs.
Main Results:
- Multivariate regressions revealed an average compensation increase of $129,263.1 (p < .001) for cardiologists upon integration.
- Physician work RVUs declined by 398.04 (p = .01) following integration.
- Findings suggest hospitals offer increased pay and decreased workloads to incentivize cardiologist integration.
Conclusions:
- Hospital integration of cardiologists is associated with higher compensation and lower work RVUs.
- This supports the hypothesis that financial incentives and workload adjustments are used to encourage integration.
- Potential shifts in hospital priorities from quality improvement to market power warrant caution.
Background:
Hospital-physician vertical integration involving employment of physicians has increased considerably over the last decade. Cardiologists are one group of specialists being increasingly employed by hospitals. Although hospital-physician integration has the potential to produce economic and societal benefits, there is concern that this consolidation may reduce competition and concentrate bargaining power among providers. In addition, hospitals may be motivated to offer cardiologists higher compensation and reduced workloads as an incentive to integrate.
Purpose:
The aim of the study was to determine if there are differences in compensation and clinical productivity, measured by work relative value units (RVUs), for cardiologists as they transition from being independent practitioners to being employed by hospitals.
Methodology/Approach:
This study was a quantitative, retrospective, longitudinal analysis, comparing the compensation and work RVUs of integrated cardiologists to their compensation and work RVUs as independent cardiologists. Data from the MedAxiom Annual Survey from 2010 to 2014 were used. Participants included 4,830 unique cardiologists that provided 13,642 pooled physician-year observations, with ownership status, compensation, work (RVUs), and other characteristics as variables for analysis.
Results:
Results from the multivariate regressions indicate that average compensation for cardiologists increases by $129,263.1 (p < .001) when they move from independent to integrated practice. At the same time, physician work RVUs decline by 398.04 (p = .01).
Conclusion:
Our findings support the conjecture that hospitals may be offering higher pay and lower workloads to incentivize cardiologists to integrate.
Practice Implications:
Although hospitals may have goals of quality improvement and lower costs, such goals may presently be secondary to service line growth and increased market power. There is reason to be cautious about some of the implications of hospital integration of cardiologists.
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