Primary care physicians generate more revenue for hospitals than specialists

A new survey that shows a "seismic shift" in medicine provides primary care physicians with a strong argument that they should be compensated more generously by hospitals.

A new survey that shows a "seismic shift" in medicine provides primary care physicians (PCPs) with a strong argument that they should be compensated more generously by hospitals.

PCPs generate more annual revenue for hospitals than specialists do, according to staffing firm Merritt Hawkins.

PCPs (defined in the survey as family physicians, general internists, and pediatricians) generated a combined average of $1.57 million for their affiliated hospitals last year, compared with a combined $1.43 million across 15 specialties, according to the survey.

Those numbers represent a big change from 2002, when Merritt Hawkins first conducted the survey. At that time, PCPs generated $1.27 million annually for affiliated hospitals, whereas specialists generated $1.59 million. So over the past decade, primary care's generated revenues have jumped 23%, whereas specialists' have declined 10%.

“A seismic shift is taking place in medicine, away from specialists and toward primary care physicians” Mark Smith, president of Merritt Hawkins, said in a statement.

The company attributed the revenue shift toward primary care and away from specialists to the growing trend of hospital employment of physicians. As PCPs become hospital employees, they may be more likely to divert tests, therapies, and other services “in-house” to their hospital employer rather than to outside resources such as radiology groups or laboratories, according to the report.

Additionally, as new practice models such as accountable care organizations (ACOs) become more prevalent, revenue from primary care is likely to increase while it decreases from specialists. That's because ACOs place a premium on lower-cost patient care, such as what typically is provided by PCPs, as opposed to more expensive, procedure-driven care from specialists.

More broadly, physicians' ability to generate revenues may become less valuable to hospitals as payment models become increasingly tied to quality of care. As that shift happens, doctors may be more valued by hospitals for their ability to deliver quality outcomes efficiently, according to Merritt Hawkins.

Combining all data regardless of physician type, the survey found that a single physician generated $1.45 million for his or her affiliated hospital in 2012. That's a decline of 6% since 2002.

Here are 2012 revenues generated for hospitals broken down by a few physician types:

family practice ($2.1 million),

internal medicine ($1.8 million),

pediatrics ($788,000),

orthopedic surgery ($2.7 million),

general surgery ($1.9 million), and

invasive cardiology ($2.2 million).

The survey was sent to hospital chief financial officers across the nation and based on data submitted by 102 facilities, according to Merritt Hawkins.

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