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Analysis

Docs Generate an Average $2.4M a Year Per Hospital

By John Commins  
   February 25, 2019

Family physicians provide an excellent ROI, earning an average $241,000 as a starting salary but generating nine times that amount in hospital revenues.

Physicians each generate an average of nearly $2.4 million in revenues annually for their hospitals, a new survey finds.

Cardiovascular surgeons, on average, generated $3.7 million for their hospitals, topping the list of money makers among the 18 specialties examined in the survey of hospital chief financial officers, which was conducted by Dallas-based physician recruiters Merritt Hawkins.

The money includes net inpatient and outpatient revenue derived from patient hospital admissions, tests, treatments, prescriptions, and procedures performed or ordered by physicians.

"The value of physician care is not only related to the quality of patient outcomes," said Travis Singleton, Merritt Hawkins' executive vice president.

"Physicians continue to drive the financial health and viability of hospitals, even in a healthcare system that is evolving towards value-based payments," Singleton said.

Invasive cardiologists were No. 2 on the list of money makers for hospitals, generating an average of $3.5 million, followed by neurosurgeons at $3.4 million, and orthopedic surgeons at $3.3 million. 

Primary care physicians pulled their weight too, according to the survey.  Family physicians generate an average of $2.1 million in net revenue, while general internists generate an average of almost $2.7 million. 

The average net revenue generated by all physicians in the survey, $2,378,727, is up 52% from 2016, the last year Merritt Hawkins conducted the survey.

Average revenue generated by each of the 18 medical specialties included in the survey increased compared to 2016, in most cases significantly.   

Even though inpatient stays declined or flat-lined in recent years, Singleton attributed the increase in net revenues to more outpatient visits, which have more than tripled since 1975,   higher costs per hospital stay, and sicker patients as the population ages.

"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."

While primary care physicians are not the top revenue generators for their hospitals, Singleton says they represent an excellent return on investment.

Family physicians average $241,000 as a starting salary, according to Merritt Hawkins' data, but they generate nine times that amount in hospital revenues. Orthopedic surgeons, with an average starting salary of $533,000, generate six times that amount for their hospitals.

“Physicians continue to drive the financial health and viability of hospitals, even in a healthcare system that is evolving towards value-based payments.”

John Commins is a senior editor at HealthLeaders.


KEY TAKEAWAYS

Invasive cardiologists were No. 2 on the list of money makers for hospitals, generating an average of $3.5 million, followed by neurosurgeons at $3.4 million, and orthopedic surgeons at $3.3 million.

The average net revenue $2,378,727 generated by all physicians in the survey is up 52% from 2016.

The increase in net revenues was attributed to more outpatient visits, higher costs per hospital stay, and sicker patients as the population ages.


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