The nation's nonprofit hospitals collected $8.26 billion in philanthropic donations in fiscal year 2010, not as high as pre-recession levels, but trending strongly in the right direction, according to a report from the Association for Healthcare Philanthropy.

AHP President/CEO William C. McGinly told HealthLeaders Media the 8% increase in donations in 2010 doesn't make up for the declines that hospitals endured in fiscal 2009. Still, he was surprised and encouraged by the report's findings. "In 2009 we dropped 11%, which was nearly $1 billion," he said. "I was hoping we would recover half of that loss this year in 2010, and we are ahead of that. So it's a little better than we thought. We are excited about that. This gives us a sense that we are slowly moving back in the right direction."

The AHP's annual survey showed that donations and grants to healthcare institutions in the not-for-profit sector totaled $8.2 billion in fiscal 2010, up $620 million over the $7.6 billion raised in fiscal year 2009. While last year's total was still short of the $8.6 billion raised in FY 2008 and the FY 2007 level of $8.3 billion, the 8% growth was the healthiest rate of advance since FY 2006.

A further breakdown in the report shows that individual donors contributed almost 60% of total giving. "We are seeing what I call 'the family' stay steady," McGinly says. "Over half the donations are coming from the employees, the boards, and foundations of the hospitals, the physicians, and grateful patients. That family group is still holding strong through all of this. They are the people in the know. They know better what the hospital is providing than the public they are serving in their community."

Annual giving was the largest fundraising source in fiscal 2010 and accounted for 20% of all funds raised, followed by major gifts (17%), capital campaigns (15%) and special events (15%). Planned giving, such as bequests, charitable gift annuities, charitable remainder trusts, and similar long-term philanthropic arrangements, accounted for 9.5 % of donations last year, similar to pre-recession levels.

In fiscal 2010, as in previous years, healthcare organizations used most of their donated dollars – 22% -- to fund construction and renovation, down from 27% in fiscal 2009. New and upgraded equipment purchases were the second-largest category, at 21%, followed by general operations at 18% -- both up slightly from FY 2009.

McGinly says hospitals are using more donations to pay for operational costs, especially with anticipated reimbursement reductions from Medicare and Medicaid. "Somehow hospitals are going to have to make that up and that is where more and more of the philanthropic dollars will be going," he said. "Ten years ago, 7% or 8% of philanthropy was going towards operations. That need is growing as hospitals struggle with the bottom line because of the cuts to reimbursements."

While philanthropy still provides a good return on investment, McGinly says the cost of raising money continues to go up. At 33 cents in fiscal 2010, the cost-to-raise-a-dollar through philanthropy remained stubbornly above 30 cents for the third year in a row. Return-on-investment declined, on average, more than 4% to just $3.05 raised for every dollar spent on fundraising.

The bottom line: Fundraising has become more challenging and, therefore, more expensive. Additional resources are needed to raise the same amount of funds during difficult economic times, the report said.

Higher than average success raising money donations was seen by fundraising programs that help to sustain hospitals associated with academic institutions and children's hospitals, by programs that have been in existence for 15 or more years, and by programs with at least four professional fundraisers on staff. McGinly says healthcare organizations with strong philanthropic arms will be best positioned to collect donations if the economic recovery – however uneven – continues.  

"We are going to see a big upswing in this coming year unless something goes wrong with the economy," McGinly says. "The economy is improving and what we are finding is of our high performing group, those who didn't have to lose staff or make cutbacks, they weathered the storms through parts of 09 and 10 and you are going to see those major donors coming back in a big way."

Ultimately, healthcare donations are tied to the economy, McGinly says. "The economy undergirds an awful lot of what donors are feeling and how generous they feel they can be," he says. "If they don't feel as wealthy as they used to because of the economy, while they are still going to be connected, they may not be as generous.

A copy of the AHP Report on Giving Fact Sheet is available here.

Primary care physicians' associations in Florida have filed a federal lawsuit to strike down a new "physician gun gag" law that they say hinders them from talking about firearms hazards with patients.

"This is not about guns. It has nothing to do with the Second Amendment right to bear arms but it infringes upon the First Amendment right to discuss firearms safety," Lisa A. Cosgrove, MD, president of the Florida Pediatric Society/Florida Chapter of the American Academy of Pediatrics, told HealthLeaders Media.

"The bottom line is it is interfering with our right to talk to our patients. Inside of my exam room, that is private territory. It is already protected under HIPAA laws. There should be nothing that interferes with that and this does."

The legislation, HB 155 – was signed into law this month by Florida Gov. Rick Scott. Lane Wright, Scott's press secretary, defended the bill. "I think that last part is what some people miss—'if the information is not relevant to the patient's medical care or safety, or the safety of others,'" Wright said in an email to HealthLeaders Media. "The law ensures respect for a patient's right to own or possess a firearm and protects them from potential discrimination and harassment in cases where it is not relevant to the patient's medical care or safety, or the safety of anyone else in the home."

Marion Hammer, the National Rifle Association representative in Florida, said she felt compelled to bring the bill to the Florida Legislature after hearing complaints for several years that gun owners were being harassed by their physicians about their firearms.

"So, we sought sponsors for legislation that would prevent doctors from invading the privacy rights of their patients and bringing their gun ban politics into examining rooms," Hammer said. "People take their children to pediatricians for medical care, not to be lectured to get rid of their guns, not to be asked if they own guns, how many, where they are stored. Those are questions that no doctor has a right to ask unless he or she fears the patient may be a danger to him or herself or others, or unless they feel someone in the home may be a danger to the patient or others."

The Centers for Disease Control and Prevention reports that there were 31,224 firearms-related fatalities in the United States in 2007. That includes 2,251 firearms-related deaths of children ages 18 and younger – more than six youth fatalities each day. CDC estimates that there were 69,863 firearms-related injuries, including 12,371 firearms-related injuries of children ages 18 or younger in 2007.

The Florida Medical Association dropped its opposition to the bill when the NRA agreed to remove penalties that included up to five years in prison and up to a $5 million fine. Now a physician accused of violating the law will be required to go before a physician review board, and could face loss of license if they're found guilty, Cosgrove says. 

Even with the weaker penalties, Cosgrove says the law goes against the practice of preventive care. "Physicians play a key role in counseling patients regarding the risk of accidental or intentional injury," she says. "It is a major health hazard facing adults and children. It is best practice to minimize those risks. As part of preventive care, doctors routinely ask about potential risks such as 'does your pool have a fence around it? Do you put up your chemicals away from your kids? Is your child buckled in a seat belt?' This is just another part of the preventive care we do."

Hammer rejects suggestions that the law chills free speech, or interferes with the patient-physician relationship. "They can consult with their patients on medical care and issues that directly affect the medical care and the health and safety of the patients," she says. "They don't get to ask anything and everything they want to ask. They have no business asking a patient how much money they have in their checking account. They have no business asking if they have expensive jewelry or what cars they drive. Your personal private property is nobody else's business. If they want to ask about seat belts they certainly can. Seat belts are not protected by the constitution."

Hammer says Florida pediatricians are following an anti-gun agenda laid down by the American Academy of Pediatrics, and pushed by groups like the Brady Center to Prevent Gun Violence, which is assisting the plaintiffs in the suit.

"The American Academy of Pediatrics had on their web site for years that they support banning guns and they encouraged pediatricians to ask families if they own guns, and if they do to tell them to get rid of their guns, and if they don't to tell them not to buy guns," Hammer says. "That is not medicine and that is not appropriate and that is what the law is designed to stop."

If physicians are concerned about public safety issues, Hammer says, they should concentrate on the preventable medical errors that The Institute of Medicine has estimated kill more than 100,000 people each year. "If they want to save lives they need to clean up their own act before they go after gun owners," Hammer says.

Cosgrove says there is no way to make the law palatable for primary care physicians. "From our standpoint as the pediatric society, we said there doesn't need to be a law or anything that regulates the physician-patient relationship and nothing that interferes with what we say to our patients."

"To have a law that gags us, you start with guns, and where do you end up," she says. "Next time do you tell me I can't talk to my patients about their sexual activity, or their drug use. Where does it stop?"

Most job openings for physicians are in hospitals, while demand for private practice physicians is on the wane, a national survey shows.

Merritt Hawkins’ 2011 Review of Physician Recruiting Incentives tracks more than 2,660 physician recruiting assignments the Irving, TX-based physician recruiters conducted nationwide from April 1, 2010 to March 31, 2011. In that time, 56% of the physician search assignments featured jobs with hospitals, up from 23% five years ago. Only 2% of Merritt Hawkins’ search assignments featured openings for independent, solo practitioners, down from 17% five years ago.

"The era of the independent physician who owns and runs his or her practice is fading," said Travis Singleton, senior vice president of Merritt Hawkins, the nation’s largest physician search and consulting firm, in a media release. "Doctors today are more likely to be employees working for increasingly large health systems or medical groups."

For the sixth straight year family physicians were the search firm’s most requested type of doctor, followed by internists, hospitalists, psychiatrists, and orthopedic surgeons. Health reform and new delivery models such as Accountable Care Organizations are driving the need for additional family physicians and internists, Singleton said.

While the demand for primary care physicians is on the rise, it continues to be the lowest paying in medicine, according to the survey. Average base salary for a family practice physician was $178,000 in 2011, $183,000 for pediatricians, $205,000 for internists, and $217,000 for hospitalists.

Subspecialists continue to earn significantly more. Orthopedic surgeons had an average base salary of $521,000, for example. Gastroenterology had a base of $424,000.

Urology saw the largest year-to-year increase in base salary of any subspecialty, up from $400,000 in 2009/10 to $453,000 in 2010/11.

Five of the Top 20 recruited specialties in the survey saw their average base salary decline between 2009/10 and 2010/11. Family practice base salary fell from $200,000 to $197,000. Neurology fell from a base of $281,000 to $256,000. Hematology/Oncology fell from $385,000 to $369,000. Radiology fell from $417,000 to $402,000, and endocrinology fell from $219,000 to $218,000, the survey showed.

While health reform promotes new payment models based on quality and efficiency, Singleton said the survey shows that "real world" physicians are still compensated on volume-based formulas such as the number of patients they see, the amount of revenue they generate, or the number of work units they accrue. More than 90% of searches in the 2011 survey that featured physician production bonuses reward physicians for fee-for-service style volume, while less than 7% reward physicians for meeting quality of cost objectives.

"Quality and cost rewards may be the physician compensation standards of tomorrow, but patient volume, revenue or work units remain the standards of today," Singleton said.           

Complete results of Merritt Hawkins 2011 Review of Physician Recruiting Incentives can be obtained by calling Merritt Hawkins at 800-876-0500.

The healthcare sector is in the midst of a "new gold rush," spurring innovation, creating jobs and providing investment opportunities in an otherwise sputtering economy, according to a report from PwC's Health Research Institute.

Three out of four Fortune 50 companies are either in the health industry or have health divisions, and healthcare is expected to account for one-fifth of the U.S. gross domestic product by 2019, according to the PwC report The New Gold Rush.

That growth – helped by a graying demographic -- is seen in new technologies, new companies, new jobs, and new markets for both traditional health organizations and new entrants from such industries as technology, telecommunications and retail.

"It's one of the only major industries in the US that is growing right now, so everyone is looking for a piece of that growth," Tom Weakland, a principal at Diamond Advisors Services, and an author of the PwC study, told HealthLeaders Media.

"Many of the Fortune 50 are traditional healthcare companies already, whether they are medical device/products companies or pharmaceutical companies or health insurance companies," Weakland says. "Many of the others are, we now find, in four other areas that we have identified as fixers, implementers, retailers, connectors. They are looking at healthcare through those lenses to try to understand where they can better define product and services to meet the needs of the healthcare industry."

Even with the boom, Weakland says companies new to healthcare could fail in they rush into the sector without understanding the market, consumer expectations, and even how they will get paid. "One of the pitfalls is the idea of the one-size-fits-all solution that is going to fit everybody. That is just not possible," he says. "You have to do rigorous analytics. You have to do a lot of customer segmentation. You have to understand your consumer base, and a lot of organizations will miss the boat on that. They'll get to the market quickly with a one-size-fits-all offering that will flounder."

Weakland says new players should also avoid the "me-too strategy. You see something that is working and you just try to mimic it without adding value or differentiating," he says.

Most importantly, he says, is understanding that the healthcare sector is incredibly large and complex and highly regulated. "You have to think about health reform and HIPAA and EMRs with meaningful use and how you adhere to that," he says. "There is so much regulation involved in healthcare that people who traditionally don't develop products and services in that market have a lot of learning to do."

• Nearly one in three American adults have worked, now work or would like to work in healthcare. Jobs in healthcare increased 65% between 1990 and 2009, while the rest of the workforce increased only 16% over the same time period.
• Of the Fortune 50 companies that have a stake in the healthcare industry, 24% would be considered traditional healthcare companies, but 52% are entering the healthcare market in non-traditional ways.
• A new generation of tech-savvy consumers is creating a new market for digital and interactive health. Consumers between the ages of 18 to 24 are two times more interested in mobile health applications or programs and three times more interested in health-related video games than those over the age of 65.
• Consumer demand for convenience and transparency in services and pricing is opening up channels for alternative sources of healthcare services. For example, the use of retail health clinics almost doubled in the past three years, from 10% of consumers who sought treatment at a retail health clinic in 2007 to 17% in 2010.
• Consumers' willingness to pay out-of-pocket for non-traditional healthcare products and services represents as much as $13.6 billion of new revenue annually, including $4 billion on health-related video games, $8.9 billion on resources that rate physicians and hospitals and $700 million on mobile health applications.

The report identifies four main roles that Weakland says companies might find the best opportunities to flourish:

1. Fixers. Companies that seek to help traditional health companies become stronger by attacking the parts of the health system that are dysfunctional, redundant, bifurcated or unsustainable.
2. Implementers. These companies see the silos in healthcare breaking down as organizations work across traditional boundaries, collaborating on innovation with a unified purpose toward government's aim of achieving a more integrated, efficient health model.
3. Retailers. These companies bring practices for prospering in high-volume, standardized markets with low margins. They use customer relationships and ubiquitous access to serve price-sensitive consumer markets and the demand for choice and convenience.
4. Connectors. These companies link information and technology across the health system. They look for ways to provide meaningful analysis and context of health data and information so that clinicians and consumers can make better decisions about health behavior.

While the growth of the healthcare industry is good for the people in healthcare industry, is it good for the rest of the economy?

"That is a good and interesting question," Weakland says. "What is good for the healthcare industry is good for the rest of the economy as long as it contributing to higher quality of care, better access to care, and bending the cost curves in the right direction. Ultimately all of that is good for the economy."