From Partner to Employee: The Captive Radiology Practice

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Terry Owen is senior vice president of Florida Hospital in Orlando. He says, “We think the old days of fee for service, the high-water mark, are behind us.” What’s coming is some permutation of the accountable-care organization (ACO), with bundling of payment for services and outcomes-driven treatment. “If we get bundled pay for disease groups, then obviously, we will need radiology services for those disease groups,” Owen says.

In June 2008, Florida Hospital put radiologists across the country on alert when it announced that it was not renewing its contract with a radiology group that had served it for 40 years. Instead, the hospital offered to take that group’s radiologists on as employees. Two-thirds of the physicians accepted.

Those who stayed were organized under a new administrative entity, Radiology Specialists of Florida, which was placed under the hospital’s subsidiary, Florida Physicians Medical Group. One of the issues that prompted the hospital to employ the radiologists was a failed negotiation with the predecessor group over subsidies for unpaid indigent care. The old group claimed that without subsidization for unpaid indigent care, it could not compete in recruiting radiologists.

Owen said in 2008 (and still says) that Florida Hospital’s intent was never to employ radiologists. That was simply the option the hospital chose after the breakdown of negotiations with the old group. “One of the tools we have is an employment model,” Owen says.
Some analysts count employed radiologists as less than 10% of those working in nonacademic settings. Radiologists might want to plan to prevent becoming employees (or, given the current vagaries of reimbursement, they might want to become employees for their own financial health).

Employment Trends

Owen believes that employment is becoming an increasingly attractive option for new radiologists coming out of residency. “What I see is an interest in more predictable shifts and a more scheduled work life, along with some concern with more stability of income,” he says. “There are changing expectations, and starting a practice can be very costly.”

Larger trends also might be pushing the employment model. Corporate teleradiology companies that can leverage technology to undercut standard hospital contracts for interpretation, especially in rural settings, are paying radiologists (either through salaries or per study) to read remotely. The consolidation of health systems into megaproviders that can adapt to insurance initiatives to drive down costs also is adding shine to the employment model.

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“What I see is an interest in more predictable shifts and a more scheduled work life, along with some concern with more stability of income.”

—Terry Owen, senior vice president,
Florida Hospital, Orlando, FL

Florida Hospital is a case in point: It is growing. While Florida Hospital in Orlando is the entity’s flagship, the system is actually composed of eight hospitals and four OICs. It treats nearly a million patients per year and is part of the even larger Adventist Health System.

Florida Hospital has mounted a task force to study evolving health-care scenarios. “I think every responsible organization is doing pilots of the ACO, the medical-home model, or some other way of delivering the product differently,” Owen says. “We strongly feel that in this country, we have a costly model without the outcomes to justify that cost. There are a number of ACO-type models or bundled-pay models on the radar screen. Earlier this year, the Florida government talked about moving all Medicaid to managed care, including provider-sponsored networks. In some parts of the country, people are a lot further along than we are here.”

With a new focus on quality and outcomes, hospitals must come up with solutions that align the incentives of physicians and the hospital. Owen says, “We all have been focused on productivity or volume, not on outcomes. How do you transition to an outcomes-driven model? That’s something we’ve got to do.” Methods of aligning the physician and hospital, including risk sharing, are being explored.

Employing radiologists or other specialists can be part of that solution, he says, although it’s a minor part now. “Our number of physician employees is significant, but it’s nowhere near the majority of the medical staff,” Owen says. As for Florida Hospital’s in-house, employed-radiologist makeover, Owen says that the transition has been seamless. Radiology Specialists