July 17, 2018
Dive Brief:
- Despite
reports to the contrary, physician-related costs aren't wreaking havoc
with hospitals’ financials, and are actually helping in some cases, Modern Healthcare reports.
- Of 47
health systems that brought more physicians on board last year, 76%
reported no notable change in their bottom line, while 22% said hiring
additional doctors boosted their finances, according to the
organization’s annual Hospital Systems Survey.
Fewer than 3% said doing so hurt them financially.
- “It’s not
as bleak as it seems,” Ken Hertz, a principal consultant with the Medical
Group Management Association’s healthcare consulting group, told Modern
Healthcare.
Dive
Insight:
Labor
costs are big for U.S. hospitals. According to a recent JAMA report,
salaries for generalist physicians average $218,173 in the U.S., versus $86,607
to $154,126 in other high-income countries. Administrative costs in the U.S.
also outpace other countries — accounting for 8% of a health system's costs,
compared with 1-3% elsewhere.
Meanwhile,
the shift to value-based payment and focus on population health is spurring
more doctors to seek hospital employment rather than practice independently. A
report conducted by Avalere for the Physician Advocacy Institute found a 100% rise in hospital-owned
physician practicesbetween July 2012 and July 2016, and a 63%
increase in the number of physicians employed by hospitals — to 72,000 at the
end of the study period.
Another
recent report, however, found that hospitals on average acquired just one
or two physician groups between 2007 and 2017. The Health Affairs report
challenged the idea that acquisition is running rampant, and noted a difference
among specialties, with just 10% of ophthalmology practices being snapped up in
that time period.
An Avalere study from 2017 had
findings different from the latest survey by Modern Healthcare. It showed that
hospital-employed physicians increased Medicare costs from four services by
more than $3 billion between 2012 and 2015 — costing beneficiaries $411
million in additional out-of-pocket costs compared to what they would have
spent at an independent physician's office.
Throughout
the industry, primary care doctors are particularly sought out. A recent
Merritt Hawkins report found that for the 12th straight year, family physicians
are the most recruited doctors.
An MGMA survey found primary care physician compensation has increased by
more than 10% in the past five years, further bolstering the notion that such
doctors are needed amid ongoing concerns of a provider shortage.
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