No fast payback from new physician hires

Most hospital CFOs do not believe that a new physician hire will yield a positive return on investment within the first two years, according to the Healthcare Value Wire, citing a new survey from the Healthcare Financial Management Association. Only 24% of 139 hospital and systems CFOs feel that hospital-employed physicians will yield a positive ROI in the early years of employment.

Be patient: Benefits of new physician hires will show up down the road in the form of improved care coordination, patient referrals, and market share. This reflects the efforts hospitals are making to control costs in the long run, which is the right approach. In the past, hospitals would seek to boost the bottom line by cutting costs in tactical ways, such as spending freezes or headcount reductions. In today’s post-healthcare-reform world, however, these tactics will not deliver enough results. Rather, hospitals now take a more strategic approach by redesigning the delivery of care and improving capacity and clinical quality of care. This is important because new payment models will be based on improving quality and costs, not volume and productivity.

Success in the new healthcare marketplace will require investments in labor, information technology, new clinical programs, additional facilities, and other assets that improve the quality of care. This will not produce short-term results—as we are seeing in this new survey. However, over the long term, it is the key to reducing costs and building value.