Payers: Expect to feel a double-team pinch

Don’t look now payers, but expect to be double-teamed by hospitals and physicians. With Medicare payments and the Prospective Payment System getting squeezed, the biggest revenue stream for both hospitals and physicians is — wait for it — you. And the need for hospitals and physicians to collaborate on care management to reduce costs is coming from the top down in the case of hospitals.

A PricewaterhouseCoopers Health Research Institute report, From Courtship to Marriage: A Two Part Series on Physician-Hospital Alignment, says that hospital CEOs surveyed “were bullish on the need to partner with physicians as a means of participating in accountable care organizations (ACOs) and other new payment arrangements.”

Physicians are also amenable to this arrangement — the report says 56 percent of doctors want to more closely align with a hospital to increase their income. Another 40 percent want to align to ensure a more consistent income stream. And perhaps the biggest reason for alignment is greater negotiating and market power, according to 68 percent of physicians.

When physicians join the hospital payroll they will be expecting an increase in income across specialties, according to the report. Interestingly, once employed by hospitals, physicians expect that half their compensation should be fixed salary, with the remainder related to incentives. The report says, “Physicians realize [that] the health system is changing to track and reward performance and that they can influence the quality and cost of care delivery at the institutional level.”

The report says that more than 80 percent of physicians expect to be paid the same or more than they are now. The average expectation was a 2.4 percent increase, ranging from 1 percent to 4.7 percent. Fewer than one in five physicians said they would accept a pay cut to work for a hospital.

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