How much is a physician worth to a hospital
On average, a physician employed by a hospital generates $1.54 million in annual net revenue — the same as in 2002, according to a 2010 survey by a physician recruiting firm.
Irving, Texas-based Merritt Hawkins, part of health care staffing specialists AMN Healthcare, in early 2010 released the results of its fourth Physician Inpatient/Outpatient Revenue Survey.
The results are taking on new meaning in Grand Rapids with the growth over the previous 18 months in the rosters of doctors employed by Saint Mary’s Health Care and Spectrum Health. Metro Health Hospital in Wyoming, which long has had its own stable of primary care osteopathic doctors at a dozen neighborhood health centers, has added specialists, many of them allopathic physicians, over the past few years.
Merritt Hawkins mailed surveys to CFOs at 5,000 U.S. acute care hospitals in October and to 3,000 again in January, and received responses from 114.
Average revenue as revealed in the 2010 survey was up 3 percent from 2007’s $1.49 million. Merritt Hawkins termed that difference “significant,” because the most recent survey was conducted during a recession that would be expected to depress hospital utilization and, in turn, per-doctor revenue.
Hospital-employed primary care specialists — including family practice, internal medicine and pediatrics — generated an average $1.38 million per year, down from their $1.59 million peak in 2004. Compare that to employed specialists, whose average revenue was $1.57 million in the current survey, compared to $1.9 million in 2004.
Hospitals across the country are embarking on physician employment plans as they try to capture referrals from primary care doctors, and new doctors seek predictable hours and relief from practice management duties and medical malpractice insurance payments.
The anticipated movement of payment models from fee for service and capitation to bundled payments that must be shared by all providers who care for a patient, is driving providers toward creation of accountable care organizations, said Kurt Mosley, vice president of strategic alliance for Merritt Hawkins.
With the reorganization of the Advantage Health primary care doctors’ group and specialists employed at Saint Mary’s, the Trinity Health hospital employed 165 physicians, Vice President of Development & Communications Micki Benz said.
Metro Health spokeswoman Ellen Bristol said her organization employed 48 doctors.
Spectrum Health employed 385 physicians, spokesman Bruce Rossman said. That included the 90 primary care doctors and infectious disease specialists that now belong to the Spectrum Health Medical Group, which was established in late 2008. DeVos Children’s Hospital and MMPC doctors were expected to be folded into SHMG by the end of 2010, he said. Rossman was uncertain about the timetable for West Michigan Heart doctors.
Dr. James Tucci, SHMG president, told trade website ModernPhysician.com for a June article that Spectrum Health is planning to spend $150 million over five years on physician recruitment. He told the publication that offers now are a little more than the median but SHMG hopes to be paying at the 75th percentile in the future.
Merritt Hawkins found the recession dampened average revenues for several specialties that rely on elective procedures, particularly cardiologists and orthopedic surgeons. However, several specialties increased average income. Psychiatry average annual net revenue, for example, increased from $888,911 in 2007 to $1.29 million in 2010. Merritt Hawkins suggested that economic conditions have exacerbated mental health issues, boosting patient demand.
Revenue also increased for pediatricians — $697,516 in 2007 to $856,154 in 2010 — and for general surgeons — from $1.9 million in 2007 to $2.1 million in the 2010 survey results.
Neurosurgeons pulled in the highest average revenue in 2010 at $2.8 million. Cardiologists were second at $2.2 million. Nephrology brought in the least at $696,888, down from $1.7 million in 2002.
Under the primary care umbrella, family practice and internal medicine doctors each generated average annual revenue of $1.6 million in the 2010 survey.
In another set of numbers, Merritt Hawkins stacked up the annual average revenue numbers against average financial incentives and guaranteed income it used in recruiting more than 3,200 physicians in 2008 and 2009. Neurosurgeons topped the list of incentives at $571,000, or 20 percent of the average revenue in the 2010 survey. Incentives for family practice doctors amounted to an average $173,000, or about 10.6 percent of the average amount generated for the hospital.