Trouble Ahead for Credit-Dependent Hospitalist Practices
First of a 3-part series on how the economic crisis affects hospitalists
The world economy and US credit markets have clearly entered into a period of serious disruption. You may be asking yourself a series of questions: “How does this affect hospital medicine? More importantly, what are the implications for my hospital, my practice group, my career?”
For the vast majority of companies and consumers, the ability to maintain financial strength and stability has become increasingly difficult. This is no less true for the hundreds of hospitalist practice groups that depend on bank lines of credit to maintain the cash flow needed to operate their business.
Many practice groups will increasingly experience difficulty obtaining credit. As a result, many groups will find it a challenge to sustain their operations and even more of a challenge to grow their business. In purely financial terms this means that many practices cannot truly afford to pay the costs of recruiting, training and on boarding new doctors, because that takes credit. Then the practice has to wait for new doctors to generate enough cash to pay for their salary and overhead. That takes more credit. As the saying goes, it takes money to make money.
It used to be a general rule that smaller companies had more difficulty obtaining credit than larger ones. But as we have seen, even giant companies can fall victim to the financial crisis. If you are a hospitalist employee – whether employed by a private practice or employed by a hospital - how do you know whether your employer can actually afford to keep you on staff? The answer is, you don’t — unless your group is part of a publicly-held company such as IPC. Few practice groups volunteer to make their financial statements known to their staff. In the midst of a financial crisis, however, the culture of secrecy that shrouds the books of so many practice groups may finally have to give way. More transparency is required to provide hospitalists the comfort they need to feel secure in their jobs.
