Healthcare Business News
Dr. Perry Pugno, vice president for education of the American Academy of Family Physicians

Primary-care docs generating more hospital revenue: survey

By Andis Robeznieks
Posted: May 8, 2013 - 2:00 pm ET

While physicians in general generated less net revenue for their affiliated hospitals last year, primary-care doctors generated more, on average, than other specialists, according to a survey of hospital chief financial officers conducted by Merritt Hawkins (PDF), an Irving, Texas-based physician recruitment firm.

According to the survey of 102 CFOs conducted in January, physicians in the 18 specialties tracked by Merritt Hawkins brought in an average of almost $1.45 million to their affiliated hospitals—a 9% decrease from the $1.54 million recorded by physicians in 2010, the last time the survey was conducted. But the revenue generated by the direct admissions, procedures, tests and other services ordered by family physicians, internists and pediatricians equaled almost $1.57 million, which was up around 13% from the almost $1.39 million recorded in 2010. (Although it was still below the almost $1.6 million reported in a 2004 Merritt Hawkins survey.) And, while orthopedic surgeons (more than $2.68 million) and invasive cardiologists (almost $2.17 million) were the top revenue-generating specialties, the average figure for the 15 non-primary-care specialists was more than $1.42 million.

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“I believe what they're saying,” said Dr. Perry Pugno, vice president for education of the American Academy of Family Physicians. “It's a lovely validation of what we've been saying: that family physicians are a valuable asset to their institutions—although they may not realize it until they dig into the numbers.”

Family physicians generated almost $2.07 million for their affiliated hospitals, an increase of more than 24.3% from the 2010 survey total of more than $1.66 million. Internists generated more than $1.84 million, which was about a 9.8% increase from the almost $1.68 million recorded in 2010. And pediatricians generated almost $788,000. This was an almost 8% decrease from the more than $856,000 reported for 2010.

The report noted that these gains could be a result of more family physicians and internists being employed by hospitals, while pediatricians are more likely to remain independent. Pugno also said that immunizations and other healthcare advances have helped keep children out of hospitals, while the use of healthcare resources by the country's aging population escalates.

“It is true that neurosurgeons and invasive cardiologists generate big dollars for hospitals, but they're expensive professions, they demand high salaries and use expensive equipment,” Pugno said.

He added that primary-care physicians can demonstrate economic value by showing how a daily 25-cent prescription regimen can help avoid a $125,000 hospitalization.

“Most of the countries in the developed world figured this out a while ago,” Pugno said while explaining the healthcare system's need for a strong primary-care foundation. “In the U.S., it's just starting to dawn on us.”

This was the fifth physician revenue-generation survey conducted by Merritt Hawkins. Previous surveys were done in 2002, 2004, 2007 and 2010. The report acknowledged that 62% of survey respondents were from hospitals with 100 beds or fewer, so smaller institutions “are somewhat over-represented” in the report.

The report noted that the healthcare system is in a transition from payments based on volume toward payment based on quality outcomes and value metrics, but fee-for-service still remains the dominant payment model.

“For today, volume remains the name of the game in payments for healthcare services, and volume of services continues to be largely driven by physicians,” the report concluded. “Little takes place in medicine that is not ordered by, reviewed by, or performed by a doctor.”

Follow Andis Robeznieks on Twitter: @MHARobeznieks

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