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'Fee-for-Service on Steroids': How Corporations Are Taking Over Medicine

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As a young physician, I defended fee-for-service medicine based on principles of professional work ethic and autonomy. Of course, that was in the realm of private practice, the model in which most of my colleagues were engaged when I began practice in 1987. I also believed, notwithstanding the interference of health insurance companies, fee-for-service private practice offered the closest approach to the classic patient-physician relationship. Recent surveys show nearly 70% of U.S. physicians now work in an employed model of corporate medicine. 

Throughout my career, I have observed that the move from independent practice to an employed model was borne more out of necessity than by choice for many physicians. My experience with corporate entities in the metro area where I practice has been that they initially seek to cohabitate with private practitioners under the guise of a mutually beneficial collaboration. Yet their appetite for growth and acquisition of independent hospitals has become an addiction. Their marketing strategy typically portrays advancement in quality and technical sophistication as well as promotes “community” models in health care. The reality is simply consolidation, monopolization, and ultimately, control of the medical profession. 

Many of my previously independent physician colleagues were drawn to the employed model of corporate medicine with the lure of higher and/or more stable income in the face of increasing economic stress posed by the growth of physician employment within surrounding health care systems. This process accelerated as the systems grew, insidiously competing with, then supplanting, private practice medicine. After nearly 30 years of independent practice, my partners and I saw the writing on the wall and sold our practice, electing to finish out our careers in an employed model.

Over my career, I have been struck by an irony found in the transition from professional peer review and governance by independent physician leadership in an open-staff model to the authority of human resource departments within the employed model of a health care system. About 20 years ago, I served as medical staff president in the largest hospital in my state, at which time 95% of the active staff were independent. Today, the active staff of that same facility is nearly 100% employed by its corporate owner. 

While human resource departments, under a mirage of physician leadership, may be more efficient in managing disruptive or incompetent physicians, they cast a blind eye toward greed. It has been my observation that one of the primary achievements of corporate medicine has been the facilitation of greed.

First, consider the impact of the EHR. Championed as having the potential to transform health care by improving documentation, portability of records, facilitating adoption/implementation of practice guidelines, improving safety, and ultimately improving quality of health care. In my view, the reality is that its strongest feature is as an accounting system. Specifically, the financial accounting of health care services delivered. In contrast to the corporate setting, I might have chosen to omit certain charges for services or not aggressively pursue a delinquent account, based on an awareness of a patient’s financial situation. This approach isn’t allowed in the corporate environment with its electronic record system capturing a charge for each and every service. 

Then, the typical RVU-based productivity reimbursement, meticulously accounted for in the electronic record, helps to obscure the economic impact of health care services on patients from employed physicians. Physicians key in more into their RVU’s and how they translate into personal income rather than into understanding the actual charge sent to the patient. Many are also oblivious to the cost of resources used in the delivery of their services. There is no financial accountability for the employed physician, if resources used in the office are excessive or wasted, in contrast to the impact of overhead in private practice.

I’ve observed a few physicians who have learned to game this system dramatically. They are well-versed in all the bullet points required for documentation of a service. They use templates for dictations in the EHR that are designed to maximize the level of service. Ostensibly, templates are encouraged by the system to improve efficiency in documentation to save physicians’ time. It is hard to prove exaggerated charges in this setting unless someone is constantly looking over the physician’s shoulder.   

This form of greed remains largely ignored inside the world of corporate medicine. To be sure, those of us who have spent a significant amount of time in private medical practice will be familiar with the occasional colleague who placed a super-sized value on income versus altruism. Their reputation for this would often become well-known over time and there could be consequences in terms of eventual decline in referrals. 

Yet there seems to be no such consequence for this type of behavior within large health care systems. First, a physician’s patients tend to be sent to them primarily by the system rather than through the physician’s reputation. Secondly, there is little incentive for the company to dissuade a physician from juicing RVUs, provided the prerequisite documentation is found in the EHR. There is mutual benefit for the company and physician.

I don’t believe the issue of greed in corporate medicine is one that can easily be addressed. Regardless of not-for-profit status, health care systems are driven to expand, consolidate, and be successful economically. Their ambition is to capture the largest share of health care consumers while herding and controlling those that provide health care services. They are top heavy with nonprofessional staff helping them achieve these goals. Even when there are physicians in positions of corporate leadership, some seem to be neglectful of the profession’s principles. Their allegiance to the health care company supersedes their allegiance to the profession of medicine.

Some time after my colleagues and I sold our practice and I became employed, a fellow physician asked me what it was like to work for the “big company.” I replied: “It’s like fee-for-service on steroids.” 

Share your thoughts on the pros and cons of corporate medicine in the comment section.

Steven Dankle, MD, is a semi-retired otolaryngologist — head and neck surgeon who has practiced in the same midwestern city for 35 years following completion of residency. He has served in several local and statewide professional leadership positions both as an independent physician as well as one employed by a large corporation. He has also traveled to Haiti nearly annually for the past 25 years on surgical missions. 

Image by ValeryBrozhinsky / GettyImages

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