Employment Subcontracts The Business of Healthcare

Medical Group Value Walks Out the Door

May 16, 2012

As much actual tension as there is between physician groups and ACOs, they share a common weakness.

From the smallest multi-provider group to the largest “alignment” entities, their real value isn’t in leases, equipment, or payor contracts, it’s in the knowledge, skills and experience of their professional employees – specifically, their physicians.

That value walks out the door every evening. There’s no guarantee that it will return in the morning. 

Continued “loyalty” must be earned, not assumed, and can be temporarily assured only so long as you have taken steps to create legal structures within which to hold it.

For hospitals and their ACOs, the issue is bleak, as the dynamic is generally different from that between physicians and physician owned groups. Costing millions to structure and many more to operate, it’s likely that ACOs will be unable to retain their physicians long term — at least their excellent physicians — as their attempts to treat physicians as fungible will lead to many physicians considering the relationship as fungible. What if you built an ACO and physicians came, but then left?

For physician group leaders, this means a comprehensive program to retain the right employees, from creating the proper practice culture to incorporating provisions within employment agreements that provide both incentives and disincentives designed to encourage the longevity of the relationship. Even in states with strict policies against enforcing covenants not to compete, other, sophisticated legal strategies can be employed.

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