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Hospital-Physician Rift Leads to 'Medical Arms Race' and Endangers Emergency Care, Berenson Says in Health Affairs Web Exclusive

Media Advisory
Dec. 5, 2006

Alwyn Cassil (202) 264-3484 or

WASHINGTON, DC—Deteriorating relations between hospitals and physicians are imperiling a wide range of health care objectives, researchers from the Center for Studying Health System Change (HSC) report in a Health Affairs Web exclusive published today.

One consequence of the unraveling hospital-physician relationship is a "medical arms race," as services once performed only in hospitals migrate to physician-owned specialty hospitals, freestanding ambulatory surgery centers, and physicians’ offices. But the estrangement between hospitals and physicians is also impeding the adoption of information technology (IT), the implementation of pay-for-performance programs and care for the uninsured. The article is available at

As one hospital executive told HSC researchers: "Doctors used to feel that in return for having the hospital as a place to care for their patients and earn income, they should contribute to the hospital, taking ED call, participating on committees, improving quality. Now they say to the hospital, screw you. . . . Many don’t even come to the hospital any more."

Robert Berenson, M.D., a senior HSC consulting researcher and senior fellow at the Urban Institute, and his coauthors report results from Round Five of HSC’s Community Tracking Study (CTS) site visits, conducted from January through June 2005 and funded by the Robert Wood Johnson Foundation. Every two to three years, HSC examines changes in the financing, organization and delivery of health care by visiting the same 12 nationally representative communities: Boston; Cleveland; Greenville, S.C.; Indianapolis; Lansing, Mich.; Little Rock, Ark.; Miami; northern New Jersey; Orange County, Calif.; Phoenix; Seattle; and Syracuse, N.Y.

In Round Five, 46 percent of hospital and health system CEOs identified various aspects of relations with physicians as among the top three pressures facing their hospitals. Twenty-one percent cited competition with physicians over services, and 11 percent cited problems assuring on-call physician emergency department (ED) coverage. In contrast, in Round Three, conducted in 2000-01, only 15 percent of hospital CEOs said that physician issues were among the top three pressures they faced; 11 percent specifically cited competition with physicians over services, and no one identified ED coverage as a major pressure.

"Competition between physician-owned specialty hospitals and community hospitals gets most of the national media attention," said Berenson. "But more widespread competition is actually happening over services, such as many advanced imaging procedures, that once could only be performed in hospitals but now can be safely done either in specialized ambulatory facilities or in physicians’ offices."

Hospital respondents in nine of the 12 CTS communities reported that difficulty with physician ED coverage was a significant issue. In these communities, most hospitals have reluctantly started paying physicians for taking ED call or have guaranteed payment for services rendered to uninsured patients, or both. The costs involved are still small, but hospitals worry that the precedent of paying physicians for ED coverage could lead to mushrooming costs down the road. For example, hospitals in Miami and Syracuse reported that physicians in specialties or at hospitals where ED coverage is not a problem have become aware that other physicians are being compensated for taking call and are starting to demand on-call payment as well.

The split between hospitals and physicians also threatens efforts to make hospital care safer and more cost-effective through IT, pay-for-performance, and other mechanisms. "To use these tools effectively, hospitals must work with committed physicians who feel like they have a stake in the hospital enterprise. These days, though, physicians who fit that bill are in increasingly short supply," Berenson said.

The HSC authors point to several policies that they say have contributed to the unraveling of the hospital-physician relationship. One example: restrictions on gain sharing between physicians and hospitals. "For example, hospitals are precluded from offering financial incentives to physicians to work to reduce hospital costs, such as agreement on selecting an agreed-upon set of implants used in orthopedic surgery," say Berenson and his coauthors, HSC President Paul Ginsburg, Ph.D., and Jessica May, a former HSC health research analyst and current Princeton graduate student.

The HSC paper is one of the lead articles in a six-article Health Affairs package on the interaction between physicians and hospitals. Two other lead articles offer different approaches to aligning incentives for physicians and hospitals more closely. Dartmouth Medical School professor Elliott Fisher and coauthors propose making "extended hospital medical staffs" accountable for quality and cost. Gail Wilensky, the John M. Olin Senior Fellow at Project HOPE, and coauthors advocate the use of comprehensive gain-sharing arrangements, where hospitals and physicians share savings generated by more efficient care delivery, as a way to transition to a future of integrated delivery systems.

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The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely research on the nation’s changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is funded principally by the Robert Wood Johnson Foundation and is affiliated with Mathematica Policy Research, Inc.


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The Center for Studying Health System Change Ceased operation on Dec. 31, 2013.