Primary Care Docs Average More Hospital Revenue Than Specialists

A survey of hospital CFOs shows primary care physicians generated a combined average of $1,566,165 for their affiliated hospitals in the last year. Other specialties generated a combined annual average of $1,424,917, the lowest average in five years, data shows.

Primary care physicians have emerged as key money makers for their affiliated hospitals and for the first time are generating more revenues on average than their specialist colleagues, a survey data from Merritt Hawkins (PDF) shows.

"For the first time in the survey's history we have primary care overtaking specialties on an average basis," says Travis Singleton, a senior vice president at the Irving, TX-based physician recruiting firm. "I was pleasantly surprised to see the survey show that. We knew it was happening, but we didn't know if the market had shown that yet."

The survey asked hospital chief financial officers to quantify how much revenue physicians in 18 specialties generated for their hospitals in the last 12 months, including net inpatient and outpatient revenue from patient referrals, tests, prescriptions, and procedures performed or ordered in the hospital.

Primary care physicians—family physicians, general internists, and pediatricians—generated a combined average of $1,566,165 for their affiliated hospitals in the last year. The remaining 15 specialties included in the survey generated a combined annual average of $1,424,917, the lowest average in the five years the survey has been conducted, the data showed.

"It's one more example of the changing balance of power from specialist to primary care, whether you see that as market driven or regulated or however you see that happen," Singleton says. "But as government and payers start to favor that gatekeeper—more preventative primary care practice of medicine—we are going to continue to see these primary care providers ascend over specialists, at least on an average basis."

Singleton says the shift is largely due to the migration of primary care physicians away from private practice and toward the employed model.

"We recognize that the majority of this bump is because more of their physicians are employed now so there is greater control," he says. "These health systems have formulated these vast employee networks and it is no secret that an employed physician is going to be much more apt and even directed in some cases to push a lab or a test or a procedure or a referral down the hall and not down the street. They aren't going to send it to an independent imaging group or an independent lab like they used to. In essence that is not really creating new money. That is just pulling that money within the hospital walls."

"As the primary care physician evolves into this quarterback of the medical home model and if they truly do what they are being designed to do, which is to control the entire flux of that patient, in theory they would dictate what tests happen and what procedures are necessary, what specialist are brought in, what preventative care or home health measures are used," Singleton says.

"In theory, if that happens, then that is where you want to invest all of your dollars, because not only are you controlling the outcome, but you are controlling the expense of your specialists."

Even with the newfound emphasis on primary care, key specialties remain top revenue generators for hospitals. Orthopedic surgeons topped the list of specialists examined in the survey. A single, full-time orthopedic surgeon generates an average of $2,683,510 a year. Invasive cardiologists generate $2,169,643, general surgeons $1,860,655, and neurosurgeons $1,684,523, the survey found.

Singleton says he's not sure how long the trend toward higher average revenues will continue for physicians.

"We know the employed physician sees 17% fewer patients than their private counterpart, and it's greater in some specialties. So it wouldn't surprise me if we looked in two or three years from now and the actual revenue per provider was down in some scenarios," he says.

"That doesn't mean the whole pie is smaller. You may have the same amount of revenue but you just may take more primary care providers to generate the same revenue, or you may see some that are leaked towards a nurse practitioner or a physician assistant as they start to grow these networks. But these are all new networks for hospital to control in a lot of cases."

When the survey was last conducted in 2010, family physicians generated an average of $1,692,832 a year on behalf of their affiliated hospitals. In 2013, that number grew to $2,067,567, an increase of 22%. Revenue gene rated by general internal medicine physicians also increased, from $1,678,341 in 2010 to $1,843,137 in 2013, a growth rate of 9%, the survey said.

"If you want to go 10 years out and say the Affordable Care Act is going to do its job then this whole survey should be in theory turned on its ear," Singleton says.

"Revenue numbers per provider shouldn't be anything more than an internal measuring stick to see how your hospital is running because the vast majority of the profits your hospital realizes will be in shared savings through efficient and effective care, theoretically. You could argue that if in 10 years everything works like how we want it to work, high revenue per provider could be seen as a negative because you don't want to see a lot of imaging and tests and other things. I don't know that we will ever get there, but that is the utopia."

"That is why I think this spike per provider may be a short-lived spike. The ramifications you are seeing now are nothing more than people preparing to have a seat at the table."