Physicians Generate Almost $2.4 Million for Their Hospitals, Up 52 percent Since 2016

A survey from Dallas-based Merritt Hawkins shows that physicians generate $2,378,727 each year in revenue for their affiliated hospitals. The data helps explain the rapid purchasing of physician groups by hospital systems over the last several years.

Merritt Hawkins, a physician search firm, asked hospital chief financial officers to calculate the financial impact of 18 different specialities over the last year. The revenue includes inpatient and outpatient services that result from hospital admissions, tests, treatments, prescriptions and procedures. These hospital referrals are big business for health systems, leading some systems to move into illegal behavior, as in the Forest Park Medical Center case where referrals were allegedly purchased with kickbacks for physicians.

Cardiovascular surgeons were the most profitable specialty measured, generating $3.7 million a year for their hospital, while invasive cardiologists brought home $3.5 million. Neurosurgeons made $3.4 million a year on average, and orthopedic surgeons helped their hospital bring in $3.3 million a year. Generalist physicians were able to generate profits for their hospitals as well, with family physicians bringing in $2.1 million annually and internists generating $2.7 million.

Overall, the $2,378,727 accrued by physicians is up 52 percent since 2016, when Merritt Hawkins last conducted the survey. Every specialty that was studied made profit gains since 2016.

Regarding return on investment, family physicians generate nine times their average salary of $241,000, while orthopedic surgeons bring home six times their average salary of $533,000.

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

 

 

Hospital inpatient stays have decreased or remained steady according to the study, but cost has jumped up, resulting in increased physician profits. Outpatient visits are up while the cost of these visits has decreased, and an aging population with greater acute healthcare needs has also impacted the increased profits.

“Demographics are our destiny,” said Singleton via release.  “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.”

See how different specialists stack up in the chart below.

(Courtesy of: Merritt Hawkins)