Florida Hold'em

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In the show down between Florida Hospital and Florida Radiology Associates, the winner took all

The story of what happened to the 60-person Florida Radiology Associates this past year has become the stuff of radiology legend. Indeed, RBJ will be publishing a comprehensive feature article on this topic in the Winter 2008 issue. As the story goes, Florida Hospital, Orlando, Fla, part of the Adventist Health System in Florida, demanded that the radiology group’s members abdicate their private practice and agree to become employees of the hospital. A 40-year win–win relationship was apparently not enough to keep the balance between the interests of the hospital and those of the radiology group in focus. Under tremendous pressure, a majority of the radiologists reportedly voted to change the bylaws so that the group could disband and its members could become employees.

It is a story that is being played out, in similar ways, in many other markets around the country, as hospitals seek ways to improve efficiency and profitability by changing the nature of their contractual relationships with various groups of physicians. Radiologists are nervous, and rightly on edge, especially watching such a large and successful radiology group disband literally overnight.

There is more to the story, however—much more. In the lexicon of business, it is important to understand that catalytic events, especially those related to contract discussions, can often have unintended consequences. This is especially true when dealing with the rather disciplined and determined executives running this country’s large health systems.

In March, a local business journal reported that the two parties were considering ending their 40-year relationship. In April, the journal reported that the radiology group planned layoffs; in May, it was reported that Florida Hospital had formed a radiology group.

Hmm. This sounds a bit like a Vegas standoff with very high stakes. Exit Florida Radiology Associates and enter Radiology Specialists of Florida, a division of Florida Physicians Medical Group, Inc, a subsidiary of the parent company. These same radiologists are now employed by the hospital. The group no longer exists.

Yes, the hospital did decide to eliminate the contract with the group (technically, the decision was not to renew when it was due to expire) and to offer its members employment under a new model. The two-year buildup to this particular decision, though, appears to have been started by demands from the radiology group focusing on needed improvements in the compensation and lifestyles of the partners.

What could groups in similar circumstances learn from the case of Florida Radiology Associates? First, the business of radiology is becoming increasingly complex, and the stakeholders do not necessarily have aligned interests. Second, a 40-year relationship should never be taken for granted. Third, radiology (medicine) is not really an 8-to-5 profession, and the lifestyles of the physicians in large hospital-based practices are likely to continue to be under pressure. Fourth, it seems that it is probably not a good idea to tell anyone who will listen—especially the local press—that you are not making enough money, or that you are being asked to work harder, and that your lifestyle is suffering as a result.

When and if you do pursue such a course of negotiation, your lifestyle just might change, and it is likely that, as an employee, you will be less in control of your personal destiny than if you had remained in private practice. If your goal is to remain in private practice, then a different approach is advisable.

Radiology groups with large hospital contracts should also understand that the hospital is one of their most important customers. Knowing that customer; providing outstanding service to that customer; and understanding that customer’s motivations, expectations, and strategies will result in a better buyer–seller relationship. Yes, as distasteful as it might sound to some, the hospital is buying your services. Hospitals have options for the provision of radiology services, and it should always be part of the radiology practice’s marketing program constantly to reinforce with this customer the value, quality, service, availability, and partnership that the group is willing to provide to the customer.

There are hospitals around the country that have been looking for ways to motivate private physician groups to fold their practices and