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Here's another shift in health care to go along with shrinking rate of growth in health care spending over the last few years: For the first time, primary care doctors are driving more revenue on a per/physician basis for hospitals than specialists. That's the finding in a new survey of hospital financial officers by physician recruiting firm Merritt Hawkins.
For 2013, the median revenue per primary care physician ascribed by about 3,000 hospital chief financial officers is nearly $1.6 million, and it is a little more than $1.4 million for specialists. In 2010, the last time Merritt Hawkins did such a survey, primary care was at more than $1.4 million, and specialties were at nearly $1.6 million. Specialists have outpaced primary care in Merritt Hawkins' survey, which began in 2002, continued in 2004 and has been conducted every three years since. The survey includes both inpatient and outpatient revenue generated for hospitals, and it does not give an aggregate total of the revenue generated by primary care and specialty physicians. [...]

“A seismic shift is taking place in medicine, away from specialists and toward primary care physicians,” said Mark Smith, president of Merritt Hawkins, in a statement. “Primary care physicians are increasingly employed by hospitals and in new delivery models, such as accountable care organizations. They are taking a greater role in driving both the delivery of care and the flow of health care dollars.”

Note that this is among physicians who are employed by hospitals, not independent providers. Researchers attribute much of the shift to the emphasis the Affordable Care Act puts on primary care, and the increasing role of primary care physicians in health care delivery because preventive services are now provided for patients with insurance without co-pays. Demand for these services is increasing, just as demand for primary care physicians will be increasing. Medicare provider cuts are also a factor. Not mentioned in the story, but another potential factor in the decline in specialist revenue is the recession and how people have curtailed spending because of it.

Given that the Affordable Care Act is going to create demand for primary care providers that will be a challenge to meet, it's good that these doctors are also increasing revenue for hospitals—that should drive more hiring and potentially better pay for these providers. Better pay could drive more medical school students into primary care instead of specialities.

Originally posted to Joan McCarter on Mon May 20, 2013 at 02:46 PM PDT.

Also republished by Daily Kos.

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Comment Preferences

  •  Specialty reimbursements likely to decline further (9+ / 0-)

    Even for physicians not employed by hospitals, the new models of coordinated care CMS is encouraging will make physician groups more responsible for spending health care dollars wisely.  Specialists won't have control over these payments, except to the extent that they join or contract with groups employing primary care physicians.  Open access to any specialist in a market will decline, as specialists have to become more flexible in pricing and procedure location in order to save money and keep those contracts.  

    The new models of care will encourage increasing resources for outpatient care, coordinated through primary care providers, to keep patients healthier and out of the hospitals.  That's where the money gets saved.  Keeping elective procedures out of hospitals will also cut their costs.  

    To survive, hospitals will have to specialize and/or become primary care aggregators, buying up networks of primary care groups.  They already have competition in this, though, as other health care organizations have the same ideas.

    If you want to cut Social Security, you're not a real Democrat.

    by Dallasdoc on Mon May 20, 2013 at 03:05:37 PM PDT

    •  Thanks for giving us a window on these (6+ / 0-)

      changes Dallasdoc and putting them into perspective.

      We saw this in Austin last year with both of us having colonoscopy/endoscopies down at two different outpatient clinics owned by docs.

      My wife also had a port a cath put in by a general surgeon in a clinic instead of a hospital.

      Last week met a guy in Santa Fe on a hiking meetup who said he was moving his mother to SF from Seattle and into assisted living.  He said he was thus far unable to find a primary care physician for her, and that more than one office had told him that they were not taking new patients because of Obamacare.

      I thought to myself 'wonder if this guy is a tea bagger. '

      I told him that I had read [on DailyKos] that there was a national shortage of primary care docs.

      He was adamant that more than one office had turned her away because of Obamacare.  

      I didn't probe as I was running out of breath on the he was.

      ###

      Move Single Payer Forward? Join 18,000 Doctors of PNHP and 185,000 member National Nurses United

      by divineorder on Mon May 20, 2013 at 03:20:50 PM PDT

      [ Parent ]

      •  divineorder - if his mother is on Medicare (7+ / 0-)

        that's common in the SF bay area. An increasing number of primary care physicians will not take new Medicare patients. Mine stopped five years ago. We have a very good relationship and I believe him when he states that he loses money on Medicare patients, even on a marginal revenue/cost basis. If the mother is on Medicaid (Medical in CA) his task will be even more difficult.

        "let's talk about that"

        by VClib on Mon May 20, 2013 at 04:53:55 PM PDT

        [ Parent ]

      •  He may not have been a teabagger (4+ / 0-)

        ... but the doctors might be.  A distressing number of doctors are just as stupid about the ACA as any other conservatives.

        VClib's speculation that they didn't want to take Medicare patients is probably on the mark.  Rather than admit they're cherry-picking patients, they'll blame Obama.  If it's any consolation, most docs like that will not fare well with the fundamental changes to health care that are coming.  Most of which started before Obamacare.

        If you want to cut Social Security, you're not a real Democrat.

        by Dallasdoc on Mon May 20, 2013 at 06:29:37 PM PDT

        [ Parent ]

    •  Fascinating stuff. (0+ / 0-)

      Thanks for the perspective.

      You should diary your thoughts on all this.

  •  the REAL story here, is that solo/group (2+ / 0-)
    Recommended by:
    FishOutofWater, MPociask

    practitioners have been and are being driven out of practice by a combination of insurance company tyranny and the next 'too big to fail' organization: the Big hospital corporation (which includes many, many hospitals in its group.)  Both insurance and BigHo$pCorp have made it impossible for doctors to practice without being part of the BigCorporation.  In essence solo/group practices are being driven out of business by this new monopoly.

    With many practices folding, it is no surprise that now the profits are showing up under their category.  And of course, "The Big Ho$pital" will have to be where people receive their primary care, because there will soon be no alternative in many parts of the country.

    But the real story here is that this is a chilling chapter in the continuing sage of "Too Big to Fail" Corporation absorbing independent practitioners and practices into their Profit Motive Borg.  Remember when there were 'mom and pop' shops?  Big Box stores rendered that obsolete.  Now we are getting "Big Box' medicine.

    THIS IS THE REAL STORY HERE.

    We Must DISARM THE NRA The next life you save may be ONE OF YOUR OWN!

    by SeaTurtle on Thu May 23, 2013 at 06:14:06 PM PDT

    •  That's the background, not the story (2+ / 0-)
      Recommended by:
      Bush Bites, FishOutofWater

      That's been a long-term trend for the 30 years I've been in the business, and the main reason I've never wanted to run a solo practice.  Solo and small group practitioners have survived far longer than I expected, but their days have been numbered for a long time.  The original sin of health care was when it was turned from a profession into an industry several decades, but it's not going back.

      The current ACA and other CMS plans for cutting costs and improving quality are written with the consolidation of health care entities as a given, not specifically to further it.  Coordinated care and medical home ideas cannot be executed by solo practitioners, because they require investments that only larger entities can make.  What will happen to remaining solo practitioners?  They will sell out to ever-expanding networks, many of which are already and have long been centered around hospitals.  Or they will join more informal confederations around similar entities, paying for and getting access to the ancillary services that are needed.  It'll be more efficient to work in an integrated system, however.

      Big box medicine has been around for decades, and will keep crowding out the mom-and-pop joints.  The Feds aren't conspiring with the corporate medicine leaders; they're looking ahead and making plans for where medicine is already going.

      If you want to cut Social Security, you're not a real Democrat.

      by Dallasdoc on Thu May 23, 2013 at 06:26:41 PM PDT

      [ Parent ]

      •  Dunno Doc, when Tenet Corp came out for Obamacare (1+ / 0-)
        Recommended by:
        Dallasdoc

        it was quite the revelation to all the hard core Republican docs in the south.

        look for my eSci diary series Thursday evening.

        by FishOutofWater on Thu May 23, 2013 at 06:44:09 PM PDT

        [ Parent ]

        •  I'm sure it was (2+ / 0-)
          Recommended by:
          FishOutofWater, MPociask

          Those idiots were watching Fox and thought Obama was a socialist.  They didn't realize Obamacare was the biggest wet kiss private insurers could possibly have hoped for.  But the insurers did, despite their kabuki outrage over having to give back some things like pre-existing conditions and an MLR limitation they probably have no intention of honoring.

          If you want to cut Social Security, you're not a real Democrat.

          by Dallasdoc on Thu May 23, 2013 at 06:59:18 PM PDT

          [ Parent ]

    •  Why is that a bad thing? (1+ / 0-)
      Recommended by:
      Dallasdoc

      The system was fucked before.

      Why not put all services in one shop, so care can be coordinated over a wide swath of specialists and generalists?

      A lot of redundant costs and mistakes were made in the handoffs between separate organizations anyway.

  •  As a family doc, I'll believe it when I see it. (2+ / 0-)
    Recommended by:
    FishOutofWater, Dallasdoc

    I've been in practice for over 25 years, and my income has fallen steadily for the past 10 years despite working longer hours. The hospitals that permit primary care docs to admit directly tend to be precisely the same ones that are closing their doors left and right: small rural hospitals and those in poor & under-served urban areas.

    Most big city academic hospitals and suburban hospitals in affluent areas earn the vast majority of their money from highly reimbursed procedures. They may be attributing more hospital income to the primary care docs by way of patients referred by us to the hospital, but this money rarely finds its way into the paychecks of said primary care docs. It flows to the institution and to the procedural subspecialists.

    "Accountable care organizations" in principle have a powerful incentive to bring more family docs into the system because we prevent expensive admissions and provide very low cost care. But these facts have been true for years, and primary care incomes have continued to fall relative to other specialties.

    The biggest hospital system in our region is courting us to joint their ACO which is in the formative stages. But its governance will be divided into four "equal" groups: the giant hospital administration, its highly paid subspecialty staff, representatives of other regional hospitals, and (bringing up the rear) community physicians, with primary care docs just one small slice of this one fourth share. This organization guarantees that (as always) primary care docs will always be outvoted by the bigger players.

    •  urban med centers make the money (0+ / 0-)

      Small and mid-sized hospitals aren't because they can't maximize return on investments in expensive equipment & infrastructure. The subspecialsts who do fancy procedures with fancy equipment make the big money. Perhaps the ACOs will change this for Medicare, but that will encourage urban hospitals to cherry pick the good insurance plans and try to minimize Medicare admissions.

      look for my eSci diary series Thursday evening.

      by FishOutofWater on Thu May 23, 2013 at 06:39:38 PM PDT

      [ Parent ]

    •  I don't blame you for your frustration (1+ / 0-)
      Recommended by:
      FishOutofWater

      My income as a primary care doc has gone up in the last decade, but that's probably because I moved from a community health center in the part of the country where docs get paid the least, to a multispecialty private group in a state with moderate physician incomes.  

      My group has recently sold itself to a much larger out-of-state group which has specialized in the sort of coordinated care CMS is pushing to three decades.  They're very good at it, with outstanding quality and patient satisfaction scores and much better than average costs.  They're a primary care group in their original very large market, but a multispecialty group in satellite entities they've bought into.  We're trying to leverage their expertise to introduce coordinated care concepts into our city, because they have shown it can lead to better and cheaper patient care.  That's important in our relatively poor state.

      We're going through rough start given the unwillingness of some of our larger payers to go along, since they own hospitals and see themselves losing money:  care is cheaper primarily because if you keep people healthier you can keep them out of the hospital, and use other resources like SNF's and ambulatory surgical centers for a lot of the care hospitals like to provide.  Our specialists are nervous, but they will do well as our capitated contract volume rises.  The incentives for them will move toward managing patients in a cost-effective way, rather than maximizing expensive procedures.  The difference from 1990's capitated care is that our EMR systems allow us to do it right, and to include increasing quality measures as a requirement for success.

      If you want to cut Social Security, you're not a real Democrat.

      by Dallasdoc on Thu May 23, 2013 at 06:52:11 PM PDT

      [ Parent ]

      •  It's all about where the money goes. (1+ / 0-)
        Recommended by:
        Dallasdoc

        Under capitation or other global payment arrangements, there may undoubtedly be huge cost savings compared to fee-for-service, with improved quality as well.

        But where do the savings go? I've heard lots of talk about 'gain-sharing', but the details of the contracts are enormously important and often exceedingly opaque to non-financial types. Tiny sub-clauses can make all the difference between significant pay increases for primary care docs, and ruinous declines.

        The Accountable Care Act mandates that these agreements place the physicians at financial risk, as a supposed anti-trust measure. (It's okay for 75% of mail order prescriptions to be managed by two companies in America, but doctors are forbidden from working cooperatively. Go figure.) This means we have to put in a big chunk of money out of pocket up front, and/or place a substantial part of our pay at risk. That's a very scary demand considering we have gotten screwed over and over by big regional groups, insurers and employers.

        Given 25 years of consistently negative experience, I am very skeptical that we will really see a financial gain from the ACA in primary care, whatever the other benefits of the law. Mind you, I still strongly support ACA because our patients will benefit and there are provisions to restrict the insurers' worst abuses.

        •  That's pretty simple (0+ / 0-)

          If you're working for someone, they get the money.  I'm much more comfortable in a physician-run organization, and feel less likely to get completely screwed by the corporate overlords that way.

          Regulation of providers is getting ridiculous, especially with the new HIPAA regulations.  I take your point about the near-complete lack of regulation of other big actors in health care, and can only hope they get theirs soon.

          If you want to cut Social Security, you're not a real Democrat.

          by Dallasdoc on Fri May 24, 2013 at 06:43:57 AM PDT

          [ Parent ]

  •  Except that as more hospitals buy up (0+ / 0-)

    primary care physician offices, these doc's now have an interest in seeing the hospital prosper. Corporate executives understand how it works, and so doc's that order expensive tests and scans will be rewarded for doing so.

    This was all explained in Time Magazine's Bitter Pill.

    Form follows function -- Louis Sullivan

    by Spud1 on Thu May 23, 2013 at 06:30:17 PM PDT

    •  I've worked in a system like that (1+ / 0-)
      Recommended by:
      Spud1

      ... as a primary care doc, and I never found that to be true.  Specialists have an incentive to do more expensive procedures, and hospitals like to host those to get more income, true, but that's the problem with fee-for-service medicine.  The hospital system I worked for was owned by Nashville crooks who were refugees from Columbia-HCA (Rick Scott's minions), and even they didn't pressure us to do unnecessary tests or procedures.  

      Increasing volumes of expensive tests and procedures, and failure to build systems to prevent needless duplication, are and have been common in these sorts of systems.  But I think they are more the result of how docs and hospitals get paid than a deliberate plot, as a general rule.

      If you want to cut Social Security, you're not a real Democrat.

      by Dallasdoc on Thu May 23, 2013 at 06:56:48 PM PDT

      [ Parent ]

  •  Hospitals can charge more for same services (1+ / 0-)
    Recommended by:
    Dallasdoc

    Primary care docs are working as hospitalists & getting paid more. We know a doc who went under when Medicare payments were held up for a few months. He shut down his practice and went to work for the hospital.

    look for my eSci diary series Thursday evening.

    by FishOutofWater on Thu May 23, 2013 at 06:31:40 PM PDT

  •  It's all about the dollahs. n/t (0+ / 0-)

    By the authority vested in me by Kaiser Wilhelm II, I pronounce you man and wife. Proceed with the execution.

    by HarryParatestis on Thu May 23, 2013 at 06:38:24 PM PDT

  •  Damnit! (0+ / 0-)

    I told everyone I was pulling my son out of Scouts, because of this ban, when really I didn't want to drive to another damned thing.

    I guess I can hang my sloth on the leader ban.

    "I would rather be right than consistent." John Marshall Harlan

    by Hawesdawg on Thu May 23, 2013 at 06:58:19 PM PDT

  •  Am I reading that right? (0+ / 0-)

    The median revenue per primary care doctor is $1.6 million a year. So as a primary care doctors that means I, along with DallasDoc and RalphDog probably generated $4.8 million in revenue.

    It's staggering, but I guess it adds up pretty quickly. Now the question is "Why did it change from 1.4 mil in 2010?"

    I can only imagine that's from lab work. I blame the trend of checking everyone's Vitamin D level. That test is $200 by itself!

    Add the absence of PSA testing to generate all the urological procedures and we have our shift from specialists to primary care doctors.

    Not exactly seismic, but anyway. . .

    "Jersey_Boy" was taken.

    by New Jersey Boy on Thu May 23, 2013 at 07:21:55 PM PDT

  •  This is a negative development for health care. (0+ / 0-)

    The macro effect of ACA is to increase the demand for health care by increasing the number of insured persons who are able to afford it.  However, ACA made no provision for increasing the supply of health care in terms of physicians, especially general practitioners ("GP's").  Consequently, there will be cost pressures as increasing demand bumps-up against relatively static supply.  This has already happened as most hospitals are reaping historically high profits.

    Hospitals provide the most expensive health care, and even the so-called "charity hospitals" are in many cases very profitable operations that pay enormous salaries and just happen to be tax-exempt.  Hospitals are hiring GP's because it is a major profit center created by Medicare/Medicaid and insurers who have attempted to shift care away from the expensive specialists.  

    Hospitals are hiring GP's to serve as "Hospitalists" under the guise of providing continuity of care.  In reality, the GP's represent another layer of billing opportunity.  For example, in Austin, Texas, the county subsidized tax-exempt hospital charged $800.00 for a consultation of less than five minutes in the case of a minor emergency.  Ironically, the patient was a city employee covered by an insurance policy that directs patients to that hospital.

    In addition to gouging patients and insurers with this additional billing layer, hospitals have exacerbated the shortage of GP's available for routine health care by taking them out of their practices.  Ironically and contrary to their stated purpose, the hospitals have further diminished continuity of care by substituting hospitalists for the patients regular GP -- in many cases, a patient's GP lacks hospital privileges.

    This GP/hospitalist trend is part of a macro-trend towards market monopolization.  In many markets, patients have limited or no choice with regards to insurance, physicians and hospitals.  That situation is only worsening as hospital chains continue to consolidate markets horizontally and vertically.  

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