Physician productivity may be going financially unrewarded, says a new physician benchmarking survey.
According to the survey by accounting firm Ernst & Young, financial losses for the physician practices of integrated delivery systems are being reduced and physician productivity is up. But the bad news for physicians is compensation remains flat.
Many integrated delivery systems have struggled since acquiring physician practices, and last year, the majority of them reported losses averaging $96,300
per physician. In August, Pittsburgh-based Allegheny Health, Education and Research Foundation filed for bankruptcy for its eight Philadelphia hospitals, citing acquisition costs and the lower-than-expected productivity of the practices it acquired.
The tide, however, may be turning. This year, losses were down to an average of $86,915 per physician. In addition, gross professional charges, or physician productivity, was up across the board: 16% for primary-care specialists, 8% for medical specialists and 4% for surgeons.
Physician income, however, did not keep pace in 1998. Compensation increased only 6% from 1997 for primary-care physicians, 3% for medical specialists and 1% for surgeons.
Jim Rodeghero, director of physician compensation in Ernst & Young's Los Angeles office, says integrated delivery systems are seeing better bottom lines because economies of scale are finally being realized, and productivity incentives are coming into play. "Many of these physicians had income guarantees in the first few years. If someone had an income guarantee in the first few years, productivity may have been down," he says. "Now that their income has gone live, so to speak, their productivity may go up a little bit."
Rodeghero doesn't expect physician compensation to increase anytime soon: Integrated delivery systems' improved financial standing rests on physician incomes increasing more slowly than productivity, he says.