- Despite reports to the contrary, physician-related costs aren't wreaking havoc with hospitals’ financials, and are actually helping in some cases, Modern Healthcare reports.
- Of 47 health systems that brought more physicians on board last year, 76% reported no notable change in their bottom line, while 22% said hiring additional doctors boosted their finances, according to the organization’s annual Hospital Systems Survey. Fewer than 3% said doing so hurt them financially.
- “It’s not as bleak as it seems,” Ken Hertz, a principal consultant with the Medical Group Management Association’s healthcare consulting group, told Modern Healthcare.
Labor costs are big for U.S. hospitals. According to a recent JAMA report, salaries for generalist physicians average $218,173 in the U.S., versus $86,607 to $154,126 in other high-income countries. Administrative costs in the U.S. also outpace other countries — accounting for 8% of a health system's costs, compared with 1-3% elsewhere.
Meanwhile, the shift to value-based payment and focus on population health is spurring more doctors to seek hospital employment rather than practice independently. A report conducted by Avalere for the Physician Advocacy Institute found a 100% rise in hospital-owned physician practices between July 2012 and July 2016, and a 63% increase in the number of physicians employed by hospitals — to 72,000 at the end of the study period.
Another recent report, however, found that hospitals on average acquired just one or two physician groups between 2007 and 2017. The Health Affairs report challenged the idea that acquisition is running rampant, and noted a difference among specialties, with just 10% of ophthalmology practices being snapped up in that time period.
An Avalere study from 2017 had findings different from the latest survey by Modern Healthcare. It showed that hospital-employed physicians increased Medicare costs from four services by more than $3 billion between 2012 and 2015 — costing beneficiaries $411 million in additional out-of-pocket costs compared to what they would have spent at an independent physician's office.
Throughout the industry, primary care doctors are particularly sought out. A recent Merritt Hawkins report found that for the 12th straight year, family physicians are the most recruited doctors. An MGMA survey found primary care physician compensation has increased by more than 10% in the past five years, further bolstering the notion that such doctors are needed amid ongoing concerns of a provider shortage.