Underscoring the importance of pediatricians, internists and family physicians to the health care industry, a new study shows primary care physicians generating more revenue on average than specialists to hospitals.
While specialists still earn more money and certain specialists like orthopedic surgeons are still hugely important to hospital revenue streams, the overall trend shows less expensive outpatient care doctors taking on greater importance to hospitals and their parent health care systems, according to the survey that looked at the three primary care disciplines plus 15 other specialties by physician staffing and recruitment firm Merritt Hawkins, a subsidiary of AMN Healthcare (AHS).
Primary care physicians generated $1.56 million in average net revenue in 2012 to their affiliated hospital compared to $1.4 million for specialists, according to a survey of more than 100 hospital chief financial officers by Merritt Hawkins. In 2010, specialist physicians on average generated nearly $1.6 million while primary care doctors brought hospitals about $1.4 million.
Mark Smith, president of Merritt Hawkins called the trend a “seismic shift,” as health care systems shift away from specialized medical care to primary care.
“Primary care physicians are increasingly employed by hospitals and in new delivery models, such as accountable care organizations (ACOs),” Smith said.
ACOs reward doctors and hospitals for working together to improve quality and to control costs. Physicians are critical to an ACO’s success in that doctors need to be a quarterback of sorts in using nurses and other caregivers to manage the medical-care of populations of patients.
ACOs link medical care providers together to improve quality. If the providers in the ACO achieve better outcomes, they divvy up money saved with the health plans.
ACOs last year began providing medical care services to seniors through contracts with the Medicare health insurance program for the elderly. In addition, most private health insurance companies, too, such as those operate by Aetna(AET), Cigna (CI), Humana (HUM), UnitedHealth Group (UNH), Wellpoint (WLP) as well as Blue Cross plans linking with ACOS to care for more patients.
Because ACOs and other new approaches to health care delivery emphasize lower cost outpatient care, revenue to hospitals from specialists like cardiologists or pulmonologists is dropping. ACOs and patient-centered medical homes are also being paid by Medicare and insurance companies increasingly through bundled payments that emphasize primary care rather than specialized care.
A non-invasive cardiologist, for example, that generated $2.6 million for a hospital in 2002 generated less than half that amount or, $1.2 million this year – a decade later. The Medicare health insurance program for the elderly has cut reimbursement for cardiology in recent years in part because many observers believe such doctors do a lot of unnecessary procedures. The lower revenue from cardiologists comes as studies have shown an overuse of certain procedures such as stenting to keep arteries open when cheaper generic cholesterol drugs abound and such drugs have reduced the need for heart procedures and surgeries.
The still sluggish economy has also impacted doctor revenue to hospitals. Revenue from the average ophthalmologist was more than cut in half last year to $725,000 per doctor from $1.6 million in 2010.
“Ophthalmology is one place you would see it as a lot of eye surgery is elective,” Smith said.