The flip side, though, is that anything that might be done wrong would be magnified in such a system.
“I think that there are some dangers in how these large companies will incentivize their hospitalists,” he adds. “If they are consistent from hospitalist to hospitalist, but if there’s a perverse adverse effect from one of their financial incentives, it will be carried out across a lot of hospitals all at the same time. “But I think it’s a little early to tell what the impact of this might be. But, at least for right now, it’s actually a positive thing because it standardizes the hospitalist.”
Tarwater says that even when larger corporations buy smaller practices, familiarity tends to remain.
“Most of what I have seen are existing groups that join through merger or acquisition, and so we already have experience with the doctors, we already have long-standing relationships with the doctors,” he says. “I think any health system or hospital would be reticent to sign up with somebody that they’ve never heard of, that doesn’t have a track record, or that they don’t know already at least some of the players.” Hospitals looking to hire a private company have to exercise caution, particularly if the company is trying to break into a new region where it isn’t known.
“Those hospitals and healthcare systems just have to be really careful who they’re signing contracts with,” he said. “It’s no different than anything else we do. You just have to know who your partners are, and what drives them and where they stand on important issues.”
Executives say patient care is not at risk, even as consolidation continues. “With or without competition, we are relentlessly trying to improve our approach to patient care, our performance, and our hospital partnerships,” Cogent HMG’s Dr. Houff says.
It doesn’t appear that more hospitalist companies are planning to go public—at least for now.
The largest privately held company, Cogent HMG, is not planning an initial public offering anytime soon, Dr. Houff says. The company’s goal is to “continue investing in smart growth to capture more of the hospital medicine market, expand offerings to our existing hospital clients, and provide additional support to our clinical teams on the ground,” he says. “We have a strong capital partner to help us in that effort and are not looking at the public markets at this time.”
Taking on stockholders is a tricky business—one that requires careful planning and a willingness from practice leaders and administrators to relinquish some autonomy to outside interests. And then there are the financial requirements.
“They’ve really got to be able to produce some serious revenue in order for somebody to be willing to put some money into them,” says Mark Hamm, CEO of EmCare Inpatient Services.
The lure of working for a private hospitalist company promises to continue to be an attractive one. Some are drawn by the leadership possibilities—those who “aspire to be the true alpha doctor,” as IPC’s Taylor puts it. Others are drawn by the stability of a larger company.