Physicians generated on average nearly $2.4 million in revenue annually on behalf of affiliated hospitals in 2018, according to a new study by Merritt Hawkins, a unit of medical staffing company AMN Healthcare. That's a 52% increase from the $1.5 million in revenue in 2016.
Cardiovascular surgeons generated the most on average for hospitals ($3.7 million). They were followed by invasive cardiologists ($3.5 million), neurosurgeons ($3.4 million) and orthopedic surgeons ($3.3 million). General internists ($2.7 million) and family physicians ($2.1 million) also made millions for affiliated hospitals.
The survey found that the top revenue-generating specialty doesn't generate as much as others when salaries are factored in. For instance, family physicians generated nine times the average starting salary of $241,000 for hospitals. Orthopedic surgeons, on the other hand, averaged six times the average starting salary of $533,000 in revenue.
The Merritt Hawkins' 2019 Physician Inpatient/Outpatient Revenue Survey found that physicians are still driving revenue despite payers increasingly moving to value-based payments. The report suggested that aging patients are more than making up for the payment models changes that can put physician and hospital reimbursements at risk.
Merritt Hawkins, a physician search firm and part of staffing agency AMN Healthcare, asked hospital CFOs to estimate revenue physicians have generated in 18 specialties over the previous 12 months. That revenue could come from inpatient or outpatient revenue and include admissions, tests, treatments, prescriptions and procedures.
Travis Singleton, Merritt Hawkins EVP, said physicians "drive the financial health and viability of hospitals."
"Demographics are our destiny," Singleton said. "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."
The report found revenue generated by primary care physicians skyrocketed in 2018 after a dip in 2016. The percentage of independent physicians dropped from nearly 50% in 2012 to 31.4% in the latest report. PCPs are more likely to be employed than specialists.
A recent report by Avalere Health and the Physicians Advisory Institute found that hospital acquired 8,000 medical practices between July 2016 and January 2018. During that time, 14,000 physicians left private practice and entered into employment arrangements with hospitals. According to the report, hospitals or health systems employed 44% of U.S. physicians in 2018, up from 25% in 2012.
Being employed by hospitals means PCPs are more likely to direct tests and therapies within the system rather than outside facilities. They also lead to more hospital admissions to the system. That could be why PCP-generated revenue is on the rise.
"Though this behavior pattern was not apparent in the 2016 survey, it may be one reason for the high revenue figures generated by primary care physicians in the 2019 survey," Merritt Hawkins said.