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MGMA Report Links Physician Compensation to Practice Ownership

By HealthLeaders Media Staff  
   October 28, 2010

Hospital ownership can make a significant difference in both revenues and compensation, a report from the Medical Group Management Association finds.

Physician group practices owned by a hospital or integrated delivery system (IDS) have lower per-physician revenues than do their counterparts practices not owned by hospitals, MGMA's Cost Survey for Integrated Delivery System Practices: 2010 Report Based on 2009 Data finds.Practice losses in groups owned by a hospital or IDS often arise from accounting systems that reallocate income and cost; thus, they tend to have lower revenue figure, according to MGMA.

The median total medical revenue for a multispecialty hospital-owned practice was $448,597 per full-time-equivalent physician, $350,011 lower than in not-hospital-owned groups ($798,608).

Those findings—and MGMA's explanation—make sense, Beth Ward, executive vice president and chief financial officer for Wellmont Health System tells HealthLeaders Media. "Hospital-based physician's revenues are accounted for in the hospital—technical—revenue stream and not the physician—professional—revenue stream. The numbers are not a surprise. The rationale and reasons stated are sound and appropriate," she says.

The report also found differences in compensation between owned and not-owned practices.

Specialists physicians working in multispecialty hospital-/IDS-owned practices earned 19.85 percent less in total compensation than those in multispecialty practices not owned by a hospital or IDS-owned practices. Specialists in hospital-/IDS-owned practices earned a median total compensation of $294,984, compared to $353,549 for those in practices that were not owned.

Primary care physicians working in multispecialty "owned" practices reported median total compensation of $192,116. Those in multispecialty not-owned practices earned $179,688 in median total compensation.

The need for primary care coverage and referrals in a hospital-/IDS-owned system may contribute to the overall difference in compensation," Jeffrey B. Milburn, MBA, CMPE, MGMA Health Care Consulting Group said in a prepared statement. Such data will help practice managers striving to benchmark their financial performance, he added.

For specialists, these new findings reflect ones issued earlier this year in MGMA's larger compensation survey.

MGMA's Physician Compensation and Production Survey: 2010 Report Based on 2009 Data, issued earlier this year, found that specialty-care physicians in practices not owned by hospitals reported higher compensation than those in hospital-owned practices.

The median compensation for a specialty-care physician in a not-hospital-owned practice was 25.5 percent greater. In addition, hospital-owned groups reported greater compensation per work RVU. This, according to MGMA, suggests that the differences in compensation for these physicians may be the result of production.

In contrast, the Physician Compensation and Production Survey found that practice ownership had little impact on primary care compensation: The difference was less than 0.4 percent.

The scope of the survey could account for the differences. MGMA's Cost Survey for Integrated Delivery System Practices: 2010 Report Based on 2009 Data contains data on 1,002 IDS practices. The Physician Compensation and Production Survey: 2010 Report Based on 2009 Data includes data on nearly 60,000 providers.

See Also:

Physician Compensation Up for 3 in 4 Specialties

MGMA: Bonus Incentives Boost Hospitalists' Productivity

MGMA: Salaries Static, Responsibilities Rise

CRNA compensation rivals some physician salaries

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