Factors Contributing to Financial Losses Among Hospital-employed Physician Groups

Hospitals and health systems struggle with the financial performance of their employed physicians, and they often justify the weak financial performance with the downstream revenue generated by patient volume in the hospital, ancillary departments and referrals to affiliated physicians.  The objective of this paper is to explore the missteps hospital systems undertake in the recruitment, onboarding, management and operational controls of employed physicians that contribute to the weak financial performance of the hospital- employed physician groups, as compared to private practice physicians.  Trends and reports from industry publications will be used to demonstrate the rising expenses of the hospital-employed medical groups, and their inability to produce the revenue required to offset the growing expenses of employed physicians.  In order to reduce the widening gap between revenue and expenses, hospital systems that employ physicians should strengthen their operational monitoring and controls.