Despite the recent growth of value-based reimbursement, which aims to lower health costs and the use of services, the average net revenue each physician generates for his or her hospital rose 7.7%, to $1,560,688, in 2016, up from $1,448,458 in 2013, according a new report from physician search firm Merritt Hawkins.
The Merritt Hawkins' survey asked hospital chief financial officers to quantify how much revenue physicians in 18 specialties generated for their hospitals in the previous 12 months. This included net inpatient and outpatient revenue derived from patient referrals, tests, prescriptions, and procedures performed or ordered in the hospital.
Net revenue generated by primary care physicians decreased 10.5% in 2016 compared with 2013, when Merritt Hawkins last conducted its survey. Hospital revenue from family practices dropped more than 38%, going from $2,067,567 to $1,493,518, and hospital income from pediatricians declined more than 18%, going from $787,790 to $665,972. However, general internists' contribution to hospital net revenue stayed virtually unchanged, at $1,830,200.
In 2013, Merritt Hawkins attributed the growth in primary care's contribution to hospital revenues to increasing employment of primary care physicians by hospitals. Hospital employment might have encouraged physicians to order tests and other services from their hospitals, rather than outside providers, the report said.
Noting that the 2016 survey reflected a decline in primary care physicians' contributions to revenue, the report suggested this "may be a result of risk-bearing reimbursement models, where primary care physicians and their employers are penalized for exceeding budgets."
Overall, however, the healthcare environment remains solidly rooted in fee-for-service and other forms of volume-based reimbursement. According to a recent Health Affairs study, 94.7% of physician office visits were covered under fee-for-service arrangements, and just 5.3% under capitation payments. This was reflected in the fact that most medical and surgical specialists generated increasing amounts of revenue for hospitals from 2013 to 2016, according to Merritt Hawkins.
"The 2016 survey suggests that emerging global/value-based payments have yet to reduce the revenue generating power of physician specialists," the report stated.
Four types of procedural specialists — orthopedic surgeons, invasive cardiologists, neurological surgeons, and general surgeons — all generated more than $2 million a year in net revenue for their hospitals in 2016, Merritt Hawkins found. At the top were orthopedic surgeons, who generated an average of $2,746,605 on behalf of their affiliated hospitals, which is up slightly from the 2013 figure.
Just behind the orthopedic surgeons were invasive cardiologists, who generated an average net revenue of $2,448,136 in 2016 compared with $2,169,643 in 2013. Neurosurgeons racked up an average net of $2,445,810, which is a big jump from $1,684,523 in 2013. (The latter number may have been an aberration, because these surgeons exceeded $2 million in the five previous surveys.) General surgeons contributed $2,169,673, which is a marked increase from $1,860,566 in 2013.
Gastroenterologists, hematologists/oncologists, obstetrician/gynecologists, and urologists all generated an average of $1.4 million or more in net revenue in 2016. The revenue derived from these specialties has not changed appreciably since 2013.
The average hospital salaries of physicians in some specialties appeared to be roughly proportional to the amount of revenue they generated for their employers. For example, proceduralists who produced more than $2 million for their hospital earned considerably more than primary care physicians or lower-revenue-generating medical specialists.
Salaries Do Not Always Match Up
Nevertheless, it is noteworthy that some specialists who produced less than generalists did for their hospitals made substantially more than the primary care physicians did. For example, family physicians who kicked up a mean $1.49 million earned an average starting salary of $198,000, whereas gastroenterologists who generated an average of $1.42 million were paid $455,000. The report noted that these and other medical specialists are increasingly in demand because of the aging population and the chronic diseases seniors tend to have.
Despite the fluctuations in Merritt Hawkins' six surveys, which began in 2004, the average annual revenue generated by all specialties has averaged about $1.5 million during that period, the firm stated. But this might change in the future, the report said.
Under value-based reimbursement models, the firm noted, "high revenues generated by primary care and other physicians for their affiliated hospitals could come to be seen as a negative, completely turning on its head traditional healthcare economics in which high revenue generation has been seen as an economic imperative. Should these models proliferate, it can be expected that the revenue numbers tracked in this survey will steadily decline as health systems and other large entities that employ physicians are rewarded for reducing services provided and thereby sharing in any savings realized from global or fixed budgets."
Medscape Medical News © 2016 WebMD, LLC
Send comments and news tips to email@example.com.
Cite this: Physician Revenue Generation for Hospitals Stays Strong - Medscape - Apr 15, 2016.