Hospitals’ race to employ physicians–the logic behind a money-losing proposition

Kocher, R., Sahni, N.R.
Submitted: May, 2011

Understanding the economics of physician employment and the actions hospitals will probably take to stem losses will help physicians make wiser judgments. Hospital owners will not engage in long-term strategies that lose money indefinitely. As patients accumulate more, and more complex, medical conditions, their care will require greater coordination, greater use of clinical data, and collaborative provider teams — which integrated delivery systems are best positioned to deliver. In the long run, any pricing distortions derived from market power and friction associated with changing the role and behaviors of physicians are likely to dissipate and be outweighed by improved productivity, outcomes, and patient experiences, and more efficient health care markets may translate into lower prices over time.

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