Thousands of doctors have turned over their practice operations to management firms and hospitals, often hoping to enhance their incomes. Until now, there have been little data to show whether that expectation has been met.
The Englewood, Colo.-based Medical Group Management Association this month released its first survey comparing physician compensation in practices that are hospital-owned or receive management services with payment in practices without such affiliations.
In addition, the MGMA provided exclusive data to MODERN HEALTHCARE that indicate how hard physicians in different practice settings work for the money they take home. The differences can be dramatic.
For example, obstetrician/gynecologists employed at hospital-owned practices keep more of their gross charges-41 cents on the dollar-than their nonhospital colleagues, who receive just 34 cents for every dollar of revenue they generate.
Hospitalists at hospital-owned practices also take home more of the revenues they generate, 57 cents vs. 48 cents for hospitalists employed in other settings
However, median total compensation for hospitalists at hospital-owned practices is just $124,070 compared with $157,000 elsewhere.
Regarding compensation, hospitalists fared well at practices managed by physician practice management companies or management services organizations, where they earned a median $170,300 vs. $135,072 elsewhere. There were no comparative data showing how much hospitalists affiliated with PPMs or MSOs take home from gross charges.
For most subspecialties, a PPM or MSO connection appeared to be a liability. For example, pulmonologists with management contracts or affiliations took home 28 cents for every revenue dollar they generated vs. 39 cents for those whose practices did not use such services. Urologists with management support kept only 27 cents on the dollar vs. 30 cents for those without.
Overall, hospital-owned practices paid physicians more of every dollar they generated in 15 of 18 specialties, or 83%. At practices affiliated with management organizations, only eight of 33 specialties, or 24%, had higher take-home ratios (See chart).
At hospital-owned practices, median compensation was higher in 18 of 27 specialties that were tracked, or 66%, than compensation at nonhospital-owned practices. For practices with management-firm affiliations, compensation was higher in only 22 of 42 specialties tracked, or 52%.
The data are based on responses from 1,675 practices of all sizes.
David Gans, MGMA survey operations director, cautions that the data on PPMs and MSOs are of limited value, since those arrangements vary dramatically, from ownership models to service contracts covering only a fraction of total practice billings.
Still, during a time of turmoil in the PPM industry, the data may allay some physicians' concerns about signing affiliation deals. Several medical groups have sued their management firms in recent months, some claiming their incomes have suffered because of high management fees.
"One of the questions that often come up is, `Are you better off with a PPM or not?' The data are fairly mixed," Gans says. His conclusion: "There's no penalty but perhaps no major gain."
Physicians who work for hospitals should take only limited comfort in knowing they're relatively well paid. Hospitals are increasingly installing productivity incentives in their pay structures.
Indeed, administrators at hospital-owned practices have requested data so they can compare their payments with those in other practices, says Lisa Pieper, a project director in the MGMA's survey department.
The MGMA also produced comparative data for hospital-owned vs. nonhospital-owned practices for its annual cost report, to be released later this month.