Page 19 - OctSam2019

CORPORATE
MEDICINE

Where Money

& Physician

Judgement

Collide

By Mike Kreager, JD, LLM

Ultimately it will be the resolve of

Texas physicians who sell their practices or

who go to work for management company-
controlled employers to appropriately push back

on the profit motive of management companies
to preserve the acknowledged priority in Texas

medical care – patients come first, before profit.

ny physician who has practiced medicine for any length of salaries and substituting productivity compensation based on work
time has seen the line demarking management and the ex- Relative value Units (wRvUs).
ercise of independent medical judgment clearly crossed. Similar waves of specialty practice acquisitions have since
In the 1990s, a new hospital business model was to acquire gate- flourished, such as in orthopedics, oncology, ob/gyn, pathology
keeper practices, primarily family medicine and internal medicine. and ophthalmology. These practice acquisitions fared better be-
The premise of the model was to control, or perhaps better put, cause the underlying business model was premised on, first, the
capture hospital admissions. payment to the physician being made up of cash, stock and long-
The 1990’s model was an utter failure, resulting in massive losses term notes (deferred compensation); and, second, an assured pay-
for the hospitals. Physicians soon reacquired their medical practices back to the buyer of a percentage of revenue or profit. In other
for virtually free. The financial flaw in the model was physician ac- words, the acquiring company was assured a payback of its pur-
countability. In over-simplified terms, the physician did not have to chase price over a five-year time frame because the physician’s
work – the base salary was guaranteed. Now twenty-five years later, base compensation was fixed for the next five years. Moreover,
the accountability issue has been solved by eliminating guaranteed the employed physician was handcuffed to the practice through

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