Hospitals have spent years building employed cardiology groups, and the payment math has traditionally supported it.
Gary Kirsh, MD, CEO of Nashville, Tenn.-based Cardiovascular Logistics, told Becker’s that the traditional math is breaking down, and that it will reshape how hospitals and independent cardiology practices work together.
The relationship between the two looks different from market to market, Dr. Kirsh said. Some are collaborative and some are openly competitive. But at its core, he said, neither side can operate without the other.
“Hospitals and independent practices are symbiotic. Really, they can’t live without each other. The hospital can live without the independent practice if it has enough employed cardiologists,” he said. “But the hospital can’t live without cardiologists. And the independent practice really can’t live without a hospital because you have patients that are too sick, obviously, and need hospitalization.”
Whether a market leans collaborative or adversarial usually comes down to market power. Hospitals that have struggled to hire or retain enough employed cardiologists depend on independent groups to cover acute needs and call, often through professional services agreements or co-management arrangements. For years, hospitals have largely been on the hiring side. Hospital employment of cardiologists rose from about 26% in 2008 to nearly 63% by 2019, and by 2024, only 30.7% of cardiologists worked in physician-owned practices, according to an analysis published in the American Journal of Managed Care.
Dr. Kirsh said Cardiovascular Logistics competes well in either environment, and part of that confidence comes from where cardiology care is heading. Procedures are moving into ASCs, monitoring and rehabilitation are moving into outpatient settings and the home, and more care is being delivered under value-based arrangements.
“The whole notion of moving in that direction, candidly, is to keep the patient out of the hospital, which is not what the hospital really wants,” he said.
In markets where the relationship is competitive, Dr. Kirsh said that shift works in independent practices’ favor.
“It’s not necessarily bad for us because we have all of those competitive advantages,” he said. “We believe we’re on the correct side of history, the correct side of the cost curve. And so we can go head to head, but prefer to be partners as well.”
The larger pressure, in his view, is on hospital finances. Hospitals are a high-cost site of care, and independent settings are lower cost, not only in cardiology but across specialties. Federal payment policy is pushing in the same direction. In its 2027 outpatient payment rule, CMS expanded site-neutral payments to imaging without contrast at off-campus hospital outpatient departments, building on earlier site-neutral cuts to clinic visits and drug administration. The American Hospital Association said it was disappointed that CMS finalized another expansion of the policy.
“The economics of hospitals are seriously under threat for good reason,” Dr. Kirsh said. “The independent setting, and it’s not just in cardiology, it’s everywhere, is a lower cost of care site. Long term, the hospitals are not on the right side of that problem.”
That pressure lands directly on employed physician groups. Dr. Kirsh said hospitals were able to employ so many cardiologists and other specialists because the site-of-service differential let them earn more for the same service, which in turn let them pay those physicians well. Hospitals also carry heavy fixed costs in buildings and infrastructure that do not shrink when payments do.
“As their reimbursement comes down and their costs are fixed and high, they’ve got a lot of brick and mortar and a lot of other infrastructure, they are going to find it increasingly hard to pay the doctors like they used to,” he said.
Dr. Kirsh sees that as the opening for a different kind of hospital partnership. Joint venture ASCs and value-based arrangements remain options, but a bigger opportunity exists, he said.
“I think that an opportunity is for them to offload their cardiology workforce out of the hospital, let them become independent and let them partner with us,” he said. “Typically we have happier doctors that have more autonomy over their practice when they’re in the independent setting.”
For hospitals facing tighter margins, that would remove a large and growing expense while keeping the cardiology coverage they cannot do without.
“One of the best ways we can work together when the hospital wants it is to take those docs out of the employed environment, off of their books, and have them stop trying to keep them happy in every way with a big bureaucracy and let them come back into independent practice, like many of them were originally,” Dr. Kirsh said. “I think we’re going to see an increased win-win in that area.”
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