Survey: Physicians net $2.4M in revenue for hospitals each year

primary care
As the population ages and as patient acuity increases, utilization of healthcare services provided by or generated by physicians also increases, according to a new analysis. (Getty/Milkos)

Even as healthcare transitions toward value-based payment models, physicians continue to be big moneymakers for hospitals.

Just how much are they worth?

While it depends on the specialty, a new analysis by Merritt Hawkins estimates that physicians generate an average of $2.38 million per year in net revenue on behalf of their affiliated hospitals. That's up from about $1.5 million in 2016, a 52% increase.  

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Cardiovascular surgeons are the biggest revenue generators for hospitals, with full-time cardiovascular surgeons earning their hospitals an average of nearly $3.7 million a year, according to the survey.

Invasive cardiologists net their hospitals $3.5 million a year, followed by neurosurgeons at $3.4 million and orthopedic surgeons at $3.3 million. 

The survey is based on responses from 62 CFOs quantifying how much revenue physicians in 18 specialties generated for their hospitals in the past year. That revenue includes net inpatient and outpatient revenue derived from patient hospital admissions, tests, treatments, prescriptions, and procedures performed or ordered by physicians.

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Family physicians generated an average of $2.1 million in net revenue annually for their affiliated hospitals, while general internists net their hospitals an average of almost $2.7 million. 

“The value of physician care is not only related to the quality of patient outcomes,” Travis Singleton, Merritt Hawkins' executive vice president, said in a statement. “Physicians continue to drive the financial health and viability of hospitals, even in a healthcare system that is evolving towards value-based payments.”

Average revenue generated by each of the 18 medical specialties included in the survey increased compared to 2016, in most cases significantly.

In theory, value-based models should result in lower volumes of physician services and therefore less revenue generated by physicians. The survey underscores how doctors still drive healthcare dollars even as the healthcare industry moves from volume- to value-based payments, according to Merritt Hawkins.The Merritt Hawkins analysis suggests that aging patient demographics, an increase in outpatient visits and other factors are trumping efforts to control healthcare spending through new delivery models.

While the number of hospital inpatient stays has decreased or remained flat in recent years, the cost per hospital stay has increased, according to Merritt Hawkins, and that may be one factor driving the comparatively high revenue averages generated by physicians.  

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The number of hospital outpatient visits has more than tripled since 1975 and the average cost of these visits has grown, a further reason for physician revenue increases, according to Singleton.  

Indeed, the Centers for Medicare & Medicaid Services (CMS) recently released a report predicting that healthcare spending will grow at a 5.5% annual clip from 2018 to 2027, pointing to aging baby boomers as a key driver of the increase. As the population ages and as patient acuity increases, utilization of healthcare services provided by or generated by physicians also increases, as do physician-generated revenues, according to the Merritt Hawkins analysis.

“Demographics are our destiny,” Singleton said in the statement. “New delivery models that promote prevention, population health and fee-for-value are laudable innovations, but they don’t change the basic facts. People get older and require more medical care, with much of it ordered by or directly provided by physicians.”

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