24 Mar It is Time for a Fresh Look at Hospital Losses on Employed Physicians? Part 2 of 3
Note: In Part 1 of this three part series I discussed the best ways to minimize losses, which can best be managed during the acquisition process. But what if it is too late?
This Part 2 examines typical options for improvement and why they meet with little success.
When faced with ballooning losses many hospital systems panic. They establish budget protocols such as: “losses can’t exceed $100,000 for primary care and $300,000 for specialists.”
Consultants are brought in to conduct comprehensive assessments. But canned solutions and thousands of dollars in consulting fees won’t help. Typical directions considered include:
1. Compensation “restructuring,” which rarely works because at a core level nobody wants to work at the same level and make less. No matter how it is packaged and obfuscated the goal is transparent to the physicians.
2. Changes in the management team. While this is sometimes necessary, often it is simply scapegoating under the guise of “doing something” or part of an optimistic “performance improvement plan.”
3. Outsourcing functions such as billing or creating a central billing office is also one of the common and ill-advised attempts at cutting costs. While costs may go down on a proforma basis, in reality the resulting revenue decline – to say nothing about what is usually lost during the conversion – almost always results in a significant net negative.
While all of these “solutions” meet the test of “doing something” about the level of losses the results are unsatisfactory.
Part 3 will discuss new perspectives and paradigms that are needed to address these issues.