A recent report by the American Medical Association on data from 2009 found that 1 in 6 doctors works for a hospital—and the number is rapidly increasing.

According to the Medical Group Management Association (MGMA), hospital-owned practices were the most successful in attracting physicians in 2009. More than half (65%) of established physicians were placed in hospital-owned practices, and almost half (49%) of physicians hired out of residency or fellowship were placed within hospital-owned practices.

Hospitals are even more motivated to recruit doctors because the new health overhaul law rewards creation of more efficient, integrated models of care. Having more doctors also guarantees a steady stream of patient referrals.

There are a number of reasons why physicians are being drawn to hospital-owned practices. Currently, there is considerable uncertainty of reimbursement for the future. And those with large Medicare populations are more likely to want to move to hospital-employed positions.

Many hospital systems can offer physicians a competitive salary as well as the ability to handle all of their administrative services for the practice, including billing, claims processing, negotiating payments from insurers, retirement benefits, and new EHR systems. Administrative work comprises a large chunk of the day in the private practice world, consuming valuable time that can be dedicated to patients.

Additionally, higher starting compensation may be one of the reasons behind this trend. According to the MGMA report, primary care and specialty care physicians in hospital-owned practices were offered more in first-year guaranteed compensation than in not hospital-owned practices.  Hospitals that employ doctors generally have more influence when negotiating with insurers than doctors working in private practice. The price difference can be significant, allowing hospitals to pay doctors more, with money to spare.

By teaming up, doctors and hospitals can minimize replicated testing and offer patients high quality of care at a lower price. Far from a new concept, this strategy is nevertheless being accelerated by healthcare reform.