Hospital Ownership Hurts Pay, Practice Revenue

This article was originally published on HCPLive.

Findings from a new survey released at the Medical Group Management Association's 2010 Annual Conference in New Orleans indicate that hospital-owned practice groups tend to have lower revenue than practices which are not hosital-owned.

Practice losses in hospital- or IDS-owned groups often arise from accounting systems that reallocate income and cost, according to the report, which found that the median total medical revenue for a multispecialty hospital-owned practice was $448,597 per full-time-equivalent physician. For groups not owned by hospitals, revenue was $798,608, marking a difference of more than $350,000.

The report, “Cost Survey for Integrated Delivery System Practices,” also revealed that specialty-care physicians working in multispecialty hospital- and IDS-owned practices earned 19.85% less in total compensation than those in multispecialty not-hospital-/IDS-owned practices. Specialists in hospital-owned and IDS-owned practices earned a median compensation of $294,984, and those non-hospital-owned and non-IDS-owned practices earned $353,549.

Primary care physicians working in multispecialty hospital- and IDS-owned practices reported median total compensation of $192,116, over $12,000 more than primary care physicians working in multispecialty non-hospital-owned and non-IDS-owned practices (who earned $179,688 in median total compensation).

“The need for primary care coverage and referrals in a hospital-/IDS-owned system may contribute to the overall difference in compensation,” said Jeffrey B. Milburn, MBA, CMPE, MGMA Health Care Consulting Group, in a statement. “Data like this will serve as a helpful tool for IDS practice managers striving to benchmark their financial performance.”

According to MGMA, the survey contains complete data on 1,002 IDS practices, and provides details on operating costs, revenue, staffing, and physician compensation. It also includes information about system contributions to individual organizations and general operating cost, overhead applied to the practice, and system characteristics.