Curious what the future of medicine will look like?  According to this recent article on, it appears that for many physicians it will involve a boss, a timeclock and a steady paycheck.  Not surprisingly, as the legal and administrative burdens of running a private practice continue to increase, more and more seasoned physicians are making the leap to hospital employment.  And, according to the CNBC article, it appears that a new generation of physicians is bypassing the private practice model altogether and heading right into hospital employment.

Unfortunately, in my experience, many hospitals are not prepared to accommodate physician employees on a large scale and often lack the expertise to manage physician practices efficiently.  After all, hsopitals are in the business (often not-for-profit) of running hospitals, not doctors’ offices.  As a result, hospital-owned physician practices can quickly become money-losing propositions.  While some hospitals may be willing to subsidize physician practices for a period of time, in my experience, they may try to play “catch-up” in the contract renewal period – imposing unrealistic performance targets on physicians or tying compensation to expenses or other factors beyond physician control.

Hospital employment can be a long-term career option but physicians should understand that most initial hospital employment terms will be less than 5 years and are commonly only 3 years.  It is critical therefore that when negotiating your initial hospital employment agreement, you try to build a framework for negotiation of renewal terms.  This may involve caps or floors on compensation adjustments, realistic performance criteria and mechanisms to overcome negotiation impasses such as reliance on independent third party valuation experts.

If you’re like most physicians, you have probably given some recent thought to selling your practice or merging with one or more other groups.  If you are part of a group practice, it’s quite possible that all members of the group might not agree on a single course of action.  Keep in mind that even if your corporate agreements say that "majority rules", dissenting shareholders may have certain rights under state law, including the right to fair value for their shares in the practice.  For an idea of what can happen if these dissenter’s rights are ignored, have a look at this recent article on

There’s an interesting piece in the Miami Herald today regarding hospitals once again acquiring physician practices. The article raises some good questions regarding the motivations underlying this growing (recurring) trend and suggests that it might be more about control than preparing for a "reformed" health care system. The article also questions whether hospitals will be any more successful this go-round in managing the acquired practices than they were in previous attempts.

I frequently represent both hospitals and physicians in practice acquisition transactions. In my experience, only a handful of hospitals and health systems have a true plan for how they will integrate the practices they are acquiring in a manner that will improve the delivery of healthcare. To be sure, how best to integrate providers to improve care is not an easy question to answer. I find, however, that the "smart" hospitals and health systems are willing to acknowledge that physicians should be involved in the development process and that they (the hospitals) do not necessarily have all the answers for how best to accomplish that goal.

If you are considering selling your practice to a hospital, or you are a hospital looking to integrate the physicians in a thoughtful way, consider whether it makes sense to begin the process with a dialogue about where each party envisions the relationship to be several years in the future. If you can reach consensus on where you want to end up, you can then structure a transaction which is specifically designed to get you there.