Hospitals sap private practices

Hawaii hospitals are paying primary care doctors double the amount physicians typically earn when starting in private practice, driving more providers to hospital medicine.

The Queen’s Medical Center is recruiting full-time “hospitalists,” who work exclusively for one hospital, for its West Oahu campus at a salary of $300,000 a year. By comparison, a typical independent primary care physician earns about $150,000 when opening a practice, while an experienced provider is paid an average of $185,000 per year.

Queen’s offer includes $275,000 in base pay to work 14 shifts per month — or $1,636 per 12-hour shift — and a $25,000 annual incentive based on certain quality metrics, according to a letter from physician recruitment firm EmCare, which was contracted by the hospital.

Hospitalists — typically internists or family medicine doctors — are paid a salary, while independent physicians are reimbursed based on volume, so the more patients a doctor sees, the more he or she earns.

As more internists and family medicine doctors go to work as hospitalists, some fear there will be fewer independent primary care doctors. Thirty percent of Hawaii physicians were employed by hospitals in July 2015, up from 22 percent in July 2012, according to a recent study released by Washington, D.C.-based nonprofit Physicians Advocacy Institute Inc.

Large hospital systems are able to offer physicians a rich benefit package, guaranteed salary and predictable work hours, which is not the case for a single doctor’s office or smaller group practice.

“Hawaii has a shortage of primary care physicians across all islands, and we’re trying to find a way to allow the independent physicians to grow their practices, to bring on partners and to meet this need internally,” said Dr. Scott Miscovich, a Kaneohe primary care doctor and owner of the Windward Primary Care Physicians group practice. “But when there’s competition (from) our health systems who are able to pay that much for the available supply, which is limited, it makes it nearly impossible for the smaller doctors across the state to be able to compete.”

In addition, reimbursements from Medicare and Medicaid, the government health insurance programs for seniors and low-income residents, do not cover the cost of care for independent physician practices, he said.

“The Medicare reimbursement rates for the state of Hawaii for PCPs (primary care physicians) are some of the lowest in the country,” he said. “We can’t attract doctors at the rates they’re getting reimbursed. An average Medicare visit that we may be reimbursed $65 for in Hawaii would be reimbursed at $130 in the state of Florida. Right now we’re in trouble with a projected 1,200 doctors short over the next five years, and we have competition at all levels. I’ve been recruiting doctors for nearly a year, and basically, the candidates are usually lost to the large health systems.”

In addition to a higher salary, part of the reason more doctors are going to work in hospitals is that they don’t need to worry about covering the overhead expenses of an office lease, electricity, medical malpractice insurance, technology and salaries for nurses and other support staff.

“It takes about three years to build a practice; at first you don’t make anything. The hospitals are paying so well for inpatient work, it is drawing doctors out of primary care. It is draining the labor pool of primary care doctors that are easily accessible to the public,” said Dr. Scott McCaffrey, president of the Hawaii Medical Association, representing about 1,900 physicians. “The other challenge for primary care doctors is that Queen’s is paying medical assistants and other medical professionals a significant amount more than primary care doctors have been traditionally paying them. Many support staff are leaving doctors to go to hospitals because they pay better on average than community doctors can afford.”

Dr. Kuo-Chiang Lian, medical director of the Queen’s medical group and hospitalist program, said over the last couple of years, the hospital has seen a 15 percent growth in the number of employed doctors as patient volume rises. Queen’s has 165 employed doctors within about 15 different specialties.

“With that growth we need to hire up to meet that need,” he said. “We have a system that’s growing and a population of patients that’s growing. We still need really good primary care doctors in the community. It’s really meeting the needs of the community and then meeting the needs of the system.”

State Sen. Josh Green, an emergency room doctor in Kohala on the Big Island, predicts that as the pool of independent doctors declines, the state will likely see more nurse practitioners and physician assistants take on primary care roles. The number of advanced-practice registered nurses in Hawaii who provide primary care nearly doubled over the past 10 years t0 958 in 2015 from 535 in 2005, according to the Hawaii State Center for Nursing.

“There’s no question that there’s a movement away from independent practice into employed medicine. Having a robust independent-physician community is good for health care, but there have been increasing challenges to stay in independent practice: Ever-increasing administrative responsibilities, costs to keep a practice open, electronic medical records expenses and just the general rigors of being out on your own make it difficult to practice independently. Without a primary-care base, the health care system will tip away from prevention and to hospital care, which is way more expensive, so we have to find ways to encourage people to stay in primary care.”