If there is one root cause of all the disgruntlement among health care workers, it is that we lost autonomy due to hospital consolidation. Relationships are largely about leverage. With rare exceptions, a single doctor cannot dramatically impact the bottom line of a hospital chain, whereas the loss of your professional income—particularly for those of us geographically rooted in an area with few alternatives—is devastating.
The beauty of locums is that you instantly gain more leverage—the hospital is more desperate to fill its scheduling gap, whereas you typically have your pick of assignments. If the assignment is unsatisfactory, you can move quickly and easily—no need to uproot your spouse and kids.
Even when doing locums, you’re still at a disadvantage. Some of this can be overcome by doing your homework—being able to recognize a fair rate and a fair contract, having standards, and knowing when to walk away. But ultimately, you are still a highly replaceable asset—typically one of several doctors filling a gap in coverage, often played off against each other by the hospital and/or locums agency.
That’s why teaming up to provide coverage and negotiate as a group makes sense.
Deal flow. One of the biggest hassles of direct contracting is convincing a skeptical administrator to opt for direct contracting over a more traditional locum company.
Ever wonder why it’s so hard to convince hospitals to try direct contracting? Theoretically, cutting out the middleman should be a big win for both sides. But put yourself in the shoes of a typical administrator who is suddenly facing a 6-month gap in coverage.
While you certainly could contact “Dr. Random MD,” who emailed you and save the hospital a few bucks, consider this: If everything goes well, it’s not YOUR money you’re saving, whereas if the individual turns out to be unreliable, it is YOUR job on the line. The risk/reward is skewed—if the unconventional approach turns into a big embarrassing mistake (like shutting down the clinic for a week or triple paying for truly last-minute coverage), you will get fired; if it succeeds in saving a few bucks, you might get a little praise.
So, administrators are inherently conservative. Hence the saying in business—no one ever got fired for hiring McKinsey. In health care, nobody gets fired for hiring Comphealth. The rest of us have a little more work to do—more doors to knock on, more deals to propose, more inertia to overcome—i.e., the numbers game.
And then, when you’ve overcome that inertia and get to the finish line, unless you’re providing full coverage to Middleofnowhere Hospital for six months straight, you will still only be capturing a small portion of the value of that deal, whereas if you had a friend in the same position, she could benefit too, and vice-versa.
A more comprehensive and attractive package. Again, returning to that administrator with a six-month hole in the schedule. One option is to go through the locums who present a slate of vetted candidates, chase down any stray credentialing documents, handle upfront questions/concerns, and leave you to give the thumbs up/thumbs down. Expensive, but everyone knows that’s par for the course for locums, so they won’t be blamed for blowing their budget.
By going the less conventional route to save money, you are left haggling with 12 different providers to fill the gap, most of whom will be dead ends, with you responsible for most of the details a locums agent handles—haggling over pay, negotiating contract details, chasing down any stray credentialing documents.
Locum companies thrive by providing a neatly packaged, comprehensive solution—a deep enough bench to fill any coverage gaps. Unless you are personally willing to provide six months of coverage in Timbuktu, you’re going to be a partial solution and probably not worth the hassle, which is probably why many of the “cut out the middleman” locums platforms have such paltry deal flow.
Better to solve your customer’s problem entirely than fix a little bit of it.
Circumventing the Stark law objection. Any physician seeking to make an above-market wage has to overcome this issue. There are ways around it—proving that direct contracting is less expensive than the market rate alternative; forming a corporation (or LLC), or Incorporation (or LLC) Corporations (even single-member corps)—some hospitals even have bylaws about contracting with other corporations only.
These strategies work, but essentially, you’re still trying to convince a skeptical administrator who has always done it the old way that paying Dr. X two times the market rate won’t trigger an audit. Doable, sure, but another spot of deal-killing friction when you least need it.
Remember, the salesman’s motto: “Always be closing,” not always be justifying why your deal doesn’t violate federal statutes.
Economies of scale. Are you going to pay a lawyer to go through that PSA? What about hiring one to form a business (corporation, LLC)? Expenses—be it $300 per hour for legal advice or a month-long rental on an Airbnb—are better split.
For that matter, so is effort. Figuring out the minutiae of the credentialing process, reviewing malpractice contracts—these tasks need to be done and done well, but usually only need to be done once.
Take advantage of individual talents. Confession time—I’m not great at negotiating. The only time I ever scored wins as an employed doc was when one of my colleagues (who was superb) negotiated a deal, and I rode his coattails. But I was great at seeing new opportunities and building teams.
Groups exist for a reason—they let people focus on what they do best. Great at negotiating? Perfect—every group needs one. Not great at negotiating but good at networking and finding opportunities? Perfect. Terrible at negotiating and networking but good at combing through PSAs and/or finding deals?
Heck, get enough people together, and you could even subcontract some of this stuff to a real salesman and get back to actually being a doctor.
Everyone is better at some things than others. Everyone wins when people can focus on what they’re good at.
Broader clinical skill sets. In my arena (neurology), as in most, some of us specialize in different areas. Some read EEGs, some do EMGs, and some read vascular studies. A varied clinical skill set means the ability to provide greater value to the customer—in addition to the revenue from different procedures; hospitals LOVE adding new service lines—(an additional bullet point on the brochure and/or website). As a bonus, this also lets you get more clinical volume focusing on your area of expertise—I certainly won’t object to the extra at-home revenue from EEG reads when my non-EEG trained colleagues are on.
Remember, apart, you’re just a discount. Together, you’re a service line, a “department in a box.”
Ancillary services. Anyone who has watched an infomercial (but wait, there’s more!) knows this one—sometimes when asking for more money you have to justify yourself—overwhelm the customer with valuable add-ons until they can’t refuse. Since throwing on veggie slicer attachments to go along with neurology coverage would get some funny looks, this would probably take the form of service add-ons—i.e., consulting. Now, you’re not just offering the hospital stroke coverage; you’re offering consulting on how to become a primary stroke center or a TIA clinic.
This can be done on your own, but it’s better done in a group. Why? Resumes. Consulting implies a greater level of expertise, true mastery. I can cover stroke call, but if I wanted to do a consulting project on setting up a stroke center, it would really look better if it came from a group with a vascular-boarded neurologist, or better yet, someone who has already set up a stroke center in the past. Unless you’ve done multiple fellowships (in which case, why did you ever leave academics?), it’s much easier to draft off each other’s expertise. As a further bonus, any consulting fees/non-clinical work will really put the Stark law objection to rest.
Credibility. People working for corporations tend to respect corporations—they certainly do, in my experience. At the very least, they’ve passed the basic litmus test of organizing themselves into a coherent group. Have a professional-looking website? What about a contact person (ideally someone who isn’t also the co-founder, CEO, and chief bottle washer)? All these things imply a level of commitment and organization above and beyond an emailed resume from a random doc. While you can do all of the above as a single provider, it’s certainly easier to do it as a group.
Risk diversification. Some deals—most deals—will fall through. Watch a contract dry up after a new hire arrives. If this is one of two or even 3 or 4 that you depend on to pay the bills, you’re in a tough spot. If you’re part of a group working with 12 or 14 different hospitals with past relationships with several others, you’re in a much better place. Being part of a group with higher deal flow is always better.
Protection from negotiating tactics. Imagine you’ve just negotiated a sweet rate for a week a month in a prime location. Congratulations! You’ve won the game!
But wait—this also means that you’re the most expensive provider—the one the locums or hospital would MOST like to replace, the one MOST likely to have “credentialing fall through” or “clinical concerns.” But if you are ALL on the same deal and ALL apt to leave if there is any harassment, well, you’re in a much better spot.
I could go on, but I’ll stop there.
By now, you’re probably getting a sense that I think physician consolidation is the way of the future—the slightly delayed but necessary response to the massive consolidation on the other side of the table.
You’re probably also getting a sense that I think these organizations are the way of the future not just for temporary locum arrangements, but as a permanent new way of doing business between hospitals and doctors—both working to flexibly accommodate varying health care needs across regions, both with in-person services and telemedicine.
After all, in most other professions—accounting, law, consulting—major firms are often structured as partnerships. It’s really only physicians who face the false dilemma of choosing between small business ownership and being employees of giant hospital chains.
I’m convinced it will happen, but whether these organizations are egalitarian partnerships between colleagues or conglomerates owned by private equity, the hospital chains themselves (internal staffing agencies), or a few more entrepreneurial physician owners is an open question.
Which will you choose?
The author is an anonymous physician.