Physician employment has returned as a critical strategy for hospital-physician alignment. A number of drivers are in place to spur its reemergence including escalating physician recruitment and retention challenges, inability to secure on-call coverage for emergency departments, and widespread and worsening physician shortages, particularly in primary care. In addition, the new generation of physicians is characterized by a strong preference for the financial security that employment arrangements with a large practice or hospital provide.

However few hospitals have the financial wherewithal in the current economic climate to tolerate excessive losses from the acquisition and employment of physicians. With the industry average subsidy of $70,000 per employed physician annually, health care executives are looking to reduce the financial drain and pursue strategies that ensure that physician employment is structured to produce the expected benefits for both the hospital or system and physician. This session will review actions to consider when pursuing and structuring employment arrangements with physicians, top initiatives for successfully reducing losses, and will present case studies from across the country that demonstrate strategies for improving the performance of employed physicians and reducing excessive subsidies.