I’m amazed at just how quickly physician employment has swung from small independent practices to hospital-based employment. I’ve heard about it anecdotally from medical societies and malpractice carriers who are seeing their constituents shift, and have certainly observed the shift from individual physicians, but I’m still surprised how fast it’s occurring. A new report from recruiter Merritt Hawkins tells the clearest story I’ve seen:

> In  the last 12 months, 56% of physician search assignments have been for hospital  jobs, whereas 5 years ago it was just 23%

> Just 2% of assignments were for independent, solo practice doctors compared with 17% 5 years ago

Doctors are becoming more like regular wage earners, albeit high paid ones. There are
some strong drivers of this trend including the need to support health information technology, comply with regulations and deal with health plans. There’s also a desire on the part of a younger, increasingly female physician workforce to have a better balance  between work and home life. If anything the forces pulling physicians into hospital employment will strengthen in the near term with the arrival of Accountable Care Organizations and other forms of deep integration.

Yet when a pendulum swings it tends to swing too far. Especially considering how
quickly things have moved, I do expect that there will be some backlash to the rush into employment. It’s really not all that much fun having a boss, especially when that boss is a big, bureaucratic hospital with other things on its priority list besides MD satisfaction and career development. Patients may not like it so much either. I know I’d rather see a physician who’s not too tightly tied to a  hospital.

So what will the reversal look like? I don’t think it’s going to be doctors rushing to put up their own shingles or buy practices of retiring doctors like in the old days. Instead I expect to see a new breed of physician employers who recognize what’s needed to make doctors happy, treat patients well, manage compliance, and still make money. One example is so-called direct primary care practices such as Qliance. Time  will tell what other forms develop.

Doctors practicing in the U.S. are becoming increasingly conscious of the increasing costs of health care. Most consider themselves cost-conscious, and are considering the impact of their practice patterns — in terms of prescribing medicines, tests, and procedures — on the nation’s health bill. In fact, most physicians feel they have a responsibility to bring down health costs.

This perspective on physicians comes from the survey report, ‘The New Cost-Conscious Doctor: Changing America’s Healthcare Landscape,’ from Bain & Company, published in March 2011. Bain spoke with over 300 U.S. physicians to assess their perspectives on managing costs, drug and device usage, and standardized care protocols.

The top-line finding is that, regardless of physician demographic — whether male or female, salaried or productivity-based, specialist or generalized, urban or rural, young or mature, doctors uniformly see that they must change clinical practice patterns to accommodate the realities of health economics.

The impacts of this on the practice will be many, including:

• Consolidating practices, increasingly being absorbed into hospital systems
• Decreasing utilization as a direct response to incentives
• Promoting preventive care
• Adapting to standardized treatment protocols.

Key Point to Ponder:

Bain rightly points out that these changed physician attitudes and behaviors will ripple through the health supply chain on to life science, medical device, pharmaceutical and technology companies. Organizations in these health supply segments must demonstrate value to physicians and patients in the larger health ecosystem in order to be adopted into clinical practice.

That physicians see cost management as part of their jobs now means that their decisions will be increasingly impacted by their collective cost consciousness lens. Accountable care models, medical homes and more tightly integrated delivery networks will bolster this approach and tightly focus that cost conscious lens. Physicians will be less inclined to try out new-new products without firm proof-of-concept and references from peer physicians who are influencers in their field. Over one-half of physicians told Bain that they’d be using comparative effectiveness analyses within two years.

Furthermore, physicians are growing more comfortable with practice protocols and standardized care, Bain found. They’re using clinical guidelines more often in 2011 than five years ago; this is especially true of younger physicians, who more often refer to practice guidelines for patients. The mass adoption and full implementation of electronic health records will enable such protocols to be pushed to clinicians at the point-of-care. In fact, physicians expect a five-fold increase in the prevalence of electronic access to clinical treatment guidelines, and an eight-fold increase in pay-for-performance programs.

For manufacturers in the health supply chain, the major challenge is to develop and market products that help lower the costs of health care. That’s the new definition of “innovation” in healthcare.