Healthcare News & Insights

Who generates more revenue for hospitals, PCPs or specialists?

Is your hospital compensating its primary care physicians (PCPs) adequately? If you’re not sure, you should find out. Reason: A new survey revealed PCPs generate more annual revenue for hospitals than specialists.

152152114The survey by Merritt Hawkins, which was detailed in Medical Economics, found that last year PCPs — family physicians, general internists and pediatricians — together generated an average of $1.57 million for their affiliated hospitals. Specialists, across 15 specialties, earned a combined average of $1.43 million.

Shocked? You aren’t alone.

Since Merritt Hawkins first started doing this survey in 2002, the numbers have changed drastically. In the past 10 years, PCPs revenues have skyrocketed 23%, while specialists have experienced a 10% decline. In 2002, PCPs generated $1.27 million annually for their affiliated hospitals, while specialists generated $2.59 million.

Mark Smith, president of Merritt Hawkins, even commented in a release, “A seismic shift is taking place in medicine, away from specilalists and toward primary care physicians.”

Reasons for the shift

So what’s going on?

One thing is for sure: It’s getting more and more difficult for PCPs to own their own private practice. Many are seeking the aid of hospitals to bear the burden of running a medical practice.

This revenue shift toward PCPs becoming hospital employees also has influenced where these physicians send their patients for tests, therapies and other in-house services. Now, for their patients’ convenience, many choose to send them to their hospital employer instead of outside groups or labs.

For example, the revenue generated by the direct admissions, procedures, tests and other services ordered by family physicians, internists and pediatricians was up 13% (almost $1.57 million) compared to 2010 (almost $1.39 million). However, it was still below the almost $1.6 million reported in a 2004 Merritt Hawkins survey.

Don’t think this message is that specialists don’t earn more money than PCPs — they still do. However, the overall trend shows that PCPs, who provide less expensive outpatient care, are taking on greater importance to hospitals.

And according to the report, this trend isn’t going to end any time soon, especially with practice models like accountable care organizations (ACOs) becoming more and more popular. These models emphasize lower-cost patient care.

However, the report did speculate that as payment models become more tied to quality of care, physicians’ ability to generate revenue may dwindle in value to hospitals and instead will look at their ability to deliver efficient quality outcomes.

2012 revenues

The survey was based on the responses of 102 hospital and health system CFOs, most of which represented hospitals with 300 or few beds. The CFOs detailed how much inpatient and outpatient revenues one full-time physician generated through procedures performed at the hospital, tests and treatments. It features data for physicians in the 18 specialties.

Here are the amounts that the physicians generated for their affiliated hospitals in 2012:

  • Orthopedic surgery ($2.7 million)
  • Cardiology, invasive ($2.2 million)
  • Family practice ($2.1 million)
  • General surgery ($1.9 million)
  • Internal medicine ($1.8 million)
  • Oncology/hematology ($1.8 million)
  • Neurosurgery ($1.7 million)
  • Obstetrics/gynecology ($1.4 million)
  • Urology ($1.4 million)
  • Gastroenterology ($1.4 million)
  • Psychiatry ($1.3 million)
  • Cardiology, non-invasive ($1.2 million)
  • Nephrology ($1.2 million)
  • Pulmonology ($1.0 million)
  • Otolaryngology ($0.8 million)
  • Pediatrics ($0.8 million)
  • Ophthalmology ($0.7 million)
  • Neurology ($0.7 million)

Notice that pediatrics is much further down the list than family practices and internal medicine. The report suggests is that more hospitals are employing family physicians and internists, because more pediatricians are keeping their independent practices. Also, it could also be a reflection of advancement in pediatric vaccinations and medicine, and an ever-increasing aging population, which uses hospitals at a much higher rate.


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