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5 Things to Watch for with Hospital-Physician Relationships in 2023

It’s a new year and while many of us are looking for a fresh start, the hospital industry is still reeling from last year’s challenges, both the ongoing impact from Covid, staffing and inflation. Additionally, although the endowment funds were producing dividends in the past decade, it has dramatically slowed with the stock market pulling back. Our team sat down and looked at the hospital-physician landscape to narrow in on five themes we expect to see in 2023. Although there are some tough hurdles ahead, there is also a little bit of good news and plenty of opportunities for hospitals to stay ahead.

1. Hospitals will implement more cost-cutting measures.

Although hospital expenses eased a little bit last quarter, most hospitals will continue to feel heavy margin pressures in 2023, especially with inflation as a key driver. As always, hospitals will need to respond to this financial reality by trimming costs where they can. That’s especially true given that hospital volumes, particularly in the outpatient world, have not come back to pre-pandemic levels. Consequently, hospitals need to pay close attention to their overall spend on their physician arrangements. This investment is millions if not billions of dollars annually, so it’s critical for hospitals to get and maintain visibility into their overall provider spend to ensure the right partnerships are in place. This has been a bucket of spending that has not received the same scrutiny in the past, many will be left with no choice.

Somewhat related to this theme of cost-cutting: we’ll likely see an increase in hospital consolidation in 2023, as more hospitals look to merge with bigger systems to offset growing costs.

2. The FTC’s noncompete change will have a big impact.

The Federal Trade Commission’s (FTC) recently proposed a ban on noncompete clauses in employment contracts. This proposal would essentially free physicians to work for a competitor, directly challenging what’s considered “status quo between physicians and their employers.” The FTC’s proposal would bar future noncompetes and also invalidate existing ones. About 45% of primary care physicians employed by group practices are bound by noncompete agreements, so this would drastically shift hospital-physician relationships as we know them, both legally and financially. This is definitely one to watch!

3. Labor shortages and burnout will continue.

The big focus for hospital executives last year was staffing concerns: recruiting, retaining and streamlining job roles of all frontline workers. Burnout within physician and nursing teams were at the highest levels they’ve ever been, and hospitals experienced an unprecedented amount of staffing shortages. This year, we expect to see that continue, while also driving more physician teams to consider unionizing. The reality is, the pandemic took a huge toll on our medical personnel and the profession as a whole, which will be felt for a generation.

4. The administrative burden on providers cannot be ignored anymore.

One hardship that existed long before Covid-19 was the amount of administrative burden providers face. And the pandemic certainly made this problem worse. The fact is, when most people think about hospital-physician relationships, what usually comes to mind is patient care. They think about procedures. They think about billings, CPT codes and wRVUs. However, the fact is, up to 25-30% of physician time is often spent on tasks outside patient care – like meetings, committees, teaching and much more. Ultimately, we ask a lot of our providers and we have to make sure they are fairly compensated for their time, even when they aren’t treating patients. Hospital executives faced with staffing shortages and physician burnout, must take a hard look at what they’re asking physicians to do and identify ways to make their lives easier. In many cases, that means automation.

5. Automation will be more critical.

According to a recent Deloitte survey of hospital workers in 2022, 83 percent said technology that automates administrative work would help improve their productivity. As hospitals continue to face the aforementioned challenges I listed above in this blog post, we’ll see more hospitals lean on automation to achieve their financial and operational goals. At Ludi, we believe that a proper physician contract strategy can help reduce expenses. Why? Because a buttoned-up provider contract strategy can streamline time-consuming processes, while also providing critical spend data that can help you optimize your approach.

So, my advice to hospitals is simple: now is the time to give technology and automation a chance. Automating physician contract and payment processes alone can help hospitals achieve a major reduction in administrative burden on their teams and a 5-6x ROI on their initial investment. Hospitals need to make these and other kinds of tech investments now if they have any hope of chipping away at and counteracting the forces driving down their margins.

Here’s to a fabulous 2023! 

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