With the physician shortage, it can be a challenge for healthcare facilities (especially rural ones) to maintain enough coverage to serve the community. One way to fill this gap is by using locum tenens physicians, but another solution is to use a physician group. This could be a large national group, or it could be a small local group. Like locum tenens, these groups have advantages and disadvantages. Here’s a look at some of the pros and cons of using physician groups.
Pro: Cost savings
In some cases, using physician groups can be a more affordable alternative to using locum tenens physicians to meet your staffing needs. To give this decision its proper due diligence, you should talk to both locums firms and physician groups, get referrals, talk to other administrators, and run the numbers for yourself to see if this holds true.
Con: Lower revenue
When using a physician group, the hospital typically only keeps the facility fees (room charge, equipment, tissues, food, medicine, etc.), while all of the professional fees for the doctors who provide the care go to the physician group. On the other hand, using a locum tenens physician allows the hospital to bill for both the facility fees and the professional fees, which increases hospital revenue. This is an important factor to consider when calculating the ROI of using a physician group vs. locum tenens.
Pro: Local caregivers
If the physician group is local (and not a national physician group), the physicians might be from your own community. Locum tenens physicians can hail from anywhere in the country, which is also true of doctors from a national physician group.
Con: Lost after-care
For rural communities, using a large, national physician group often means that any after-care may be referred away from your community to a bigger market, resulting in lost revenue. Staffing with local physicians or with a locums means that your after-care is more likely to stay in your area, which benefits patients, your facility, and your local community.
Con: Insurance concerns
Patients who have confirmed that their local hospital accepts their insurance still could be in for a shock. It’s not a given that the physician group will accept their insurance. In many cases, the physicians in these groups are considered out-of-network, which could result in patients getting stuck with hefty bills — hurting your patients and perhaps even your reputation in the community.
This has happened to many patients when a hospital uses outside physician groups, especially in the ED, according to a study by researchers at Yale University. They found that some emergency physician outsourcing firms took advantage by either remaining out-of-network or by using it to negotiate higher in-network rates. Under one ED physician group, there was an 81% hike in the portion of visits by that insurer’s customers that led to an out-of-network bill, and another ED physician group put pressure on and renegotiated rates and received in-network rates 68% higher than previously.
Con: Unexpected bills
A New York Times article looked at a hospital in Spokane, Wash., that turned to an ED physician group and found that before the physician group was hired, about 6% of patient visits in the hospital’s emergency room were billed for the most complex, expensive level of care. After the physician group arrived, nearly 28% received the highest-level billing code. Additionally, the physician group was out-of-network, and thus billing patients with unexpected “balance” bills not covered by insurance — and much higher than typically charged for those services. The article also looked at the same thing happening at a hospital in Crescent City, Calif. that used a national physician group.
Evaluating your options
Running a healthcare organization is challenging job. When it comes to staffing, there is a lot to consider, and there are pros and cons to both physician groups and locum tenens. As you do your due diligence, we’re happy to transparently talk through financials so you can make informed decisions.
Weatherby Healthcare has helped healthcare facilities with their staffing needs for more than 20 years. Give us a call at 954.343.3050 to learn how we can help you.
