The Business of Healthcare Podcast The Business of Healthcare Podcast, Episode 133 Independent Physician Practices—Today's Emerging Models
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Jan 29, 2026 Dr. John R. Mehall, a former cardiac surgeon turned healthcare executive and entrepreneur, discusses evolving physician practice models. He contrasts hospital employment, independent groups and private equity partnerships. He covers why hospitals struggle with employed physicians, how subsidies and RVU pay create strain, and what it takes to rebuild independence through ancillaries, capital and operational support.
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Hospital Employment Lowers Productivity And Requires Subsidies
- Hospital employment often reduces physician productivity by 20–30% and creates internal competition through RVU-based contracts.
- Rising hospital subsidies (>$300k/physician) are unsustainable as reimbursement advantages erode.
Accounting Separates Physician And Hospital Revenue
- Hospital accounting separates physician professional fees from hospital DRG technical fees, hiding true profitability of services.
- Hospitals often subsidize physician pay from technical revenue, obscuring the real cost of employed clinicians.
Replace Hospital Subsidies With Ancillary Revenue
- If physicians leave employment, plan for new revenue streams to replace hospital subsidies before transitioning.
- Build or partner for ancillaries like office-based diagnostics or ambulatory surgery centers to capture technical fees.