"I do not believe the motivation of any hospital that has ever gotten involved with [this] is to increase reimbursement," Dauner said.

Creating and supporting a foundation is costly, with most foundations in California losing money initially, Dauner argued.

"The typical hospital that has foundations ends up subsidizing the doctors in the foundation anywhere between half a million a year and four million a year," he said.

Foundations help hospitals and doctors deliver services more efficiently, Dauner said. They also allow better coordination of care, which he believes can help hospitals and doctors endure what he considers the harsh financial environment of continued reimbursement cuts, coupled with health care reform.

For instance, Medicare encourages medical home models that require coordination among providers, which Dauner said is easier under a foundation structure.

WHEN THE CONTRACT IS UP

Once the contract between the hospital and the doctors group expires, it will terminate 187 physicians' jobs. The contract affects researchers and certain specialists contracted by the hospital through the group: radiologists, anesthesiologists, radiation oncologists and pathologists.

But that doesn't mean the physicians will be out of work. The hospital said it will offer nearly all of these physicians jobs as part of its medical foundation.

The hospital was also quick to point out that changes won't affect doctors who treat patients at the hospital, who will retain full privileges to work there. Under California law, doctors charge separately from the institution.

"Physicians who do not join the foundation will be able to practice here at City of Hope and enjoy all the clinical opportunities," Friedman said, adding "Nothing changes here from the patient's perspective."

Yet without the hospital's contract, the doctors group would not be able to survive, explained Jensen. He said the group isn't able to find another research lab, research nurses -- the infrastructure to support the academic side of medicine.

On the other hand, Jensen said the hospital needs the group's physicians. Without certain departmental specialists, a hospital legally cannot operate. And, Jensen pointed out the hospital would be unable to find the same quality physicians by the time the contract expires.

"They have to have us, and we have to have them," he said.

Of course, once out of their individual contracts, doctors from the group may turn to the foundation to practice their medicine and research, said Lawrence Weiss, president of the doctors group.

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