Physician Recruitment and Health Care Access in Rural Louisiana

Linda Benedict  |  8/23/2007 3:00:27 AM

Table 1. Hospital-Physician Contractual Arrangements by Region.

Figure 1. Geographic Health Professional Shortage Areas

J. Matthew Fannin and James N. Barnes

While Louisiana faces a short-term healthcare crisis brought about by hurricanes Katrina and Rita, an often-understated longterm healthcare crisis exists in rural Louisiana. According to the Louisiana Department of Health and Hospitals, 49 of Louisiana’s 64 parishes are classified as geographic shortage areas for primary care physicians. These parishes, disproportionately in rural areas, typically have only one family practice, general practice, internal medicine, pediatric or OB-GYN physician for each 3,000 or more residents (Figure 1).

One way to improve healthcare access for rural residents is to increase the number of primary care physicians in local communities. A major challenge, however, is recruiting physicians to rural areas, which typically offer lower pay, fewer local amenities, few consulting local physicians and less-equipped hospitals and clinics.

LSU AgCenter researchers have been investigating how to strengthen recruitment of physicians in rural Louisiana. Their first step has been to look at the economic incentives hospitals use to recruit physicians. One way of examining these incentives is to observe the various types of contractual arrangements used between hospitals and physicians.

According to a 2004 survey by the American Hospital Association, contractual arrangements between hospitals and physicians in Louisiana closely mirror the Southern average. Table 1 shows 58 percent of these arrangements have no formal structure; only that the physician is given the right to admit patients and provide follow-up care management in the hospital. About 14 percent of Louisiana hospitals only have physicians who are fully employed by that hospital. Another 27 percent of hospitals have a mix of arrangements, which may include combination employment, admittance rights only and mixed arrangements where physicians may contract portions of their time with a hospital for managed care or for operating hospital-owned clinics.

  • Each arrangement type has a different set of incentives that attract physicians, including length of contract, revenue-sharing options, liability insurance coverage and salary, among others.

  • Employment arrangements guarantee the physician a specific salary while the hospital typically gains exclusive admittance of the physician’s patients and at the same time can more closely monitor physician performance.

  • Admittance-rights arrangements typically work well for physicians who over the long term enjoy the financial rewards that accrue from building a practice from the ground up.

  • Mixed arrangements are typically preferred by physicians who want to maintain some autonomy in their medical practice but minimize some of the up-front financial risk. This risk is often minimized by a hospital providing clinical space and equipment for the physician to use in starting his or her practice as well as assisting the physician in being added to local and regional health care insurance plans in order to secure an initial group of patients.

No one arrangement type is best for a specific hospital. In some cases, the community must be flexible in negotiating these  contracts based on the risk tolerance of the prospective physician. In other cases, the hospital must evaluate its own risks in developing contractual terms with a physician. A rural hospital with a high debt load from investments in buildings and equipment can’t afford to have a downturn in the number of hospital beds that are filled over the long term. Without the proper contractual arrangements with physicians, rural hospitals may lose patients to local physicians who admit a larger proportion of patients to regional hospitals in urban areas.

Rural physician recruitment is a national healthcare problem and has been for many years. While several factors are well understood that affect successful recruitment of physicians to rural areas, we know little about the economic incentives hospitals use to recruit physicians in the United States and certainly in Louisiana. In the past decade, a number of federal programs have provided rural hospitals financial support, which often has been used to strengthen recruitment incentives. These include the Critical Access Hospital and the Federally Qualified Health Center programs.

Future research by AgCenter faculty will focus on how changing federal policies such as these will affect the contractual arrangements used by hospitals when recruiting physicians to rural areas and the type of contractual arrangements hospitals use in persistent poverty areas of rural Louisiana. Perhaps hospitals in these areas could use an alternative contractual arrangement to improve recruitment. Such a step bodes well for providing access to health care services in rural areas of Louisiana.

J. Matthew Fannin, Assistant Professor, Department of Agricultural Economics & Agribusiness, LSU AgCenter, Baton Rouge, La.; James N. Barnes, Director and Assistant Professor, Delta Rural Development Center, Oak Grove, La., and Department of Agricultural Economics & Agribusiness, LSU AgCenter, Baton Rouge, La.

This article was published in the summer 2007 issue of Louisiana Agriculture.)

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