Physician-Hospital Employment: This Time It’s Different


Physician-hospital employment – particularly hospital acquisitions of medical groups and direct employment of physicians – is on the upswing, driven, in large measure, by structural changes in the U.S. health care system and generational shifts in physicians’ attitudes regarding work-life balance and loss of compensation due to reimbursement cuts.

Employing physicians or acquiring physician-owned groups can help hospitals capture specialty skills, gain market share and competitive advantage, prepare for integrated care models and control the governance and infrastructure necessary for future growth. Yet, integrating groups of incoming physicians into a hospital can be difficult.

Earlier waves of physician-hospital consolidation ended, for many, with divesture. This time things are different and hospitals cannot afford to fail, as integrating properly will enable successful navigation of health care transformation.

This Issue Brief discusses:

  • Health care system changes that are driving physician-hospital employment
  • Lessons learned from the1990s consolidation wave
  • Current physician employment strategies: acquisitions and direct employment
  • Deloitte’s view on the future of physician-hospital employment: supply-and-demand issues
  • Implications for industry stakeholders: hospitals, physicians, health plans and life sciences companies

The trend of physician-hospital employment is expected to continue as pending shifts in care models and reimbursement practices are likely to drive hospitals and physicians to work more closely together. Participating organizations may want to consider whether to identify, employ and align with the right physicians to help master the heightened financial, regulatory and quality-of-care expectations of a transformed marketplace.

Download the Issue Brief.