What is your value to your hospital?

Merrit-Hawkins, a national physician search firm, recently released a study regarding physician referral impact as it relates to revenue for hospitals. For the study, researchers from Merritt Hawkins asked hospital CFOs to quantify the amount of revenue physicians in 18 different medical specialties generated for their affiliate hospital in the previous 12 months. CFOs were asked to consider both net inpatient and outpatient revenue derived from patient referrals, tests, prescriptions and procedures performed or ordered.

A copy of the Press Release and summary can be found on Merritt-Hawkins website.

Ultimately, the survey found that individual physicians generated approximately $1,560,000 in net revenue (cash receipts) per year per hospital. While the survey looked at 18 specialties, orthopedics received a reasonable amount of attention. According to the survey, an orthopedist generates approximately $2,700,000 of revenue on an annualized basis, which was the highest of any specialty.

What does this really mean?

The median salary of an orthopedist that generates this amount of revenue to a hospital was revealed to be making approximately $497,000. According to the Medical Group Managers Association (www.mgma.com) most recently released physician compensation data (2014) shares that nationally, orthopedic surgeons who practice general orthopedics, and are 3 to 7 years in an established practice, generate $807,000 in net revenue from their professionally performed services, and at median, receive approximately $507,000 in total income.

What are you providing for your hospital?

If you extrapolate the data and call the numbers close to equal for comparative purposes, for every dollar you generate in professional fees, your hospital or facility generates 3.3 times the net revenue you do. Let’s take this one step further, and look at publicly available data for some of the largest for-profit healthcare companies and their net operating margin as compared to their revenue in the table below:

While these numbers had to be extrapolated from multiple sources, hopefully, this will help demystify and provide physicians a range of the revenue and operating margin physicians provide for hospitals and facilities.