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What is a Physician Worth to a Hospital?


There is a major reason why hospitals are so eager to acquire practices in competitive markets; each physician in a full-time practice generates between $1 million and $3 million in consequent hospital activity.

Each physician in full-time practice generates from $1 million to $3 million in consequent hospital activity, depending upon specialty, according to a Merritt Hawkins survey. That ranges from pediatrics (the perennial hospital also-ran) to cardiovascular surgery (the perennial hospital darling at the top of the heap). That is a major reason why hospitals are so eager to acquire practices in competitive markets. They want to sew up their base to keep their financial noses above water.

Just keep that in mind the next time you negotiate with a hospital; they will talk about your personal annual billing — a lower amount — while they are really after your higher downstream financial impact, which is opaque to you, but not them.

Another unclear amount of potential benefit to docs under a hospital’s umbrella is that Health Affairs estimated in 2011 that the average cost to each doctor of his or her interaction with insurance companies alone was $83,000(!) per year. Hopefully, that burden, if negotiated properly, can get transferred to the hospital’s accounts receivables staff. By the way, for the nation’s estimated 835,000 practicing physicians, the total of these interactions with insurance companies is a cool $69 billion. What a waste.

While we are recoiling from the large costs focused upon the waste and inefficiency in healthcare reported in the news, let us keep in mind that the benefits of healthcare are much harder to quantify, especially in prevention. Many folks like to compare what metrics we do have by evaluating healthcare efforts among various nations and their respective medical systems, but it always slides into apple versus oranges confusion.

In our own political arena, keep in mind that we have an election coming up, which will, in part, lever on our own clumsy efforts to improve the health and wellbeing of our citizens.

In an attempt to stimulate further debate — read: inflame the Faithful — I offer the following stats on our political parties; the “Sociological Forum” has determined that parents of 2 boys are 14% more likely to vote Democrat than parents of a boy and a girl. But wait, it gets stranger; parents of 2 girls are 11% more likely to vote Republican than parents of a girl and boy. Have a cocktail or 2 and try to figure that one out.

Other stats are more predictable. According to Gallup, 74% of Republicans say the country’s best days are behind us while 69% of Democrats say our best days are ahead. Pew Research adds that 80% of conservative Republicans say people can get ahead if they work hard compared with 36% of liberal Democrats. And you might expect that 62% of liberal Democrats believe government programs can do a lot to reduce poverty while just 21% of conservative Republicans believe so.

There is just enough evidence on both sides of the debate to keep it roiling along. Further reason for compromise, a currently rare commodity.

Lastly, and most surprisingly, The Wall Street Journal — that bastion of conservative viewpoint now owned by Rupert Murdoch — released a study that showed over the last 64 years and 16 terms, the US economy has grown at a rate of 4.35% when a Democrat was president. When a Republican was in office, the growth rate for the US economy was just 2.54%.

Go figure.

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Victor J. Dzau, MD, gives expert advice
Victor J. Dzau, MD, gives expert advice