Why Are Hospital-Based Physicians Still Contracting?
Let’s ask the question nobody in hospital medicine seems comfortable asking out loud:
Why are hospital-based physicians still contracting with insurance companies?
Because if we’re being honest…
For most ER physicians, trauma surgeons, intensivists, anesthesiologists, and hospital-based specialists—
There’s very little upside. And a lot of downside.
The Assumption Everyone Just Accepts
Somewhere along the way, this became “standard thinking”:
“You need to be in-network to get paid.”
That might be true for:
Primary care
Elective specialties
Office-based practices
But for hospital-based physicians? That logic doesn’t hold the same weight.
You Don’t Control Patient Volume Anyway
Let’s start here.
Hospital-based physicians:
Don’t market for patients
Don’t rely on referrals
Don’t compete for foot traffic
Patients don’t choose you. They show up at the hospital. Or they’re brought in. Or they’re admitted.
Which means:
Your volume is driven by the facility—not your network status.
So what exactly are you gaining by being in-network?
In-Network = Pre-Negotiated Discounts
When you sign a contract, what are you really doing?
You’re agreeing to:
Accept reduced reimbursement rates
Follow payer-specific rules and edits
Limit your ability to challenge payments
In other words: You’re locking in a discount before the claim is even submitted.
And not just a small one.
In many cases, contracted rates for hospital-based services are:
Significantly below reasonable value
Not reflective of acuity or complexity
Outdated compared to current cost structures
Out-of-Network Isn’t What It Used to Be… But It Still Matters
Yes, the landscape changed—especially with regulations like the No Surprises Act.
But let’s be clear:
Out-of-network doesn’t mean “out of control.”
It means:
You’re not locked into artificially low rates
You have leverage in payment negotiations
You can pursue appropriate reimbursement based on case complexity
And in many cases, even under current regulations:
Payments can still exceed contracted rates.
The Quiet Problem: You’re Leaving Money on the Table
Here’s what we see over and over:
Hospital-based groups that are:
Fully contracted with major payers
High volume
High acuity
But still:
Collecting below expected revenue
Experiencing payer-driven reductions
Accepting underpayments as “normal”
Why?
Because once you’re contracted:
There’s less room to challenge
Less leverage to escalate
More dependency on payer interpretation
And over time…
That adds up to real money lost.
“But Hospitals Require Us to Contract”
This is the pushback that comes up every time.
And yes—some hospitals:
Strongly encourage contracting
Include it in agreements
Or imply it’s necessary for alignment
But let’s break that down.
Hospitals care about:
Network participation at the facility level
Patient access and throughput
Avoiding patient complaints
They don’t necessarily care if:
You’re being underpaid
Your group’s revenue is optimized
Your contracts are financially favorable
Those are your problems—not theirs.
The Real Question You Should Be Asking
Instead of asking:
“Should we be contracted?”
Start asking:
Are our contracted rates actually competitive?
Are we collecting more or less than we would out-of-network?
Which payers are consistently underpaying us?
Where do we have zero negotiating leverage because of contracts?
Because if the answers don’t make financial sense…
Why are you still signing?
This Isn’t About Being Anti-Contract
Let’s be clear.
This isn’t a blanket statement that no one should contract.
This is about being intentional.
There may be cases where contracting makes sense:
Strong, well-negotiated rates
Strategic payer relationships
Specific hospital requirements
But what we see most often is:
Groups contracting by default—not by strategy.
What a Smarter Approach Looks Like
If you’re a hospital-based group, your strategy should include:
Payer-by-payer analysis (not all contracts are equal)
Expected vs. actual reimbursement tracking
Out-of-network benchmarking
Underpayment identification and escalation
Regular contract renegotiation—not set-it-and-forget-it
Because the goal isn’t just participation.
The goal is optimized reimbursement.
The Bottom Line
If you’re an ER physician or hospital-based specialist…
You don’t rely on network status to get patients.
So the real question becomes:
Why are you accepting lower payments to solve a problem you don’t have?
Contracting isn’t inherently wrong.
But contracting without leverage, without analysis, and without a clear financial upside?
That’s where the problem is.
Final Thought
If your current strategy is:
“We’ve always been contracted, so we stay contracted…”
That’s not a strategy.
That’s inertia.
And in today’s reimbursement environment—
Inertia is expensive.