Oct 30, 2010

Put Doctors on Salary, Part 2

The previous post generated some consternation among several readers (for good reason). Here's a (somewhat) related article published in Fierce Health which highlights that independent practices earn more than their hospital owned counterparts. No wonder policy wonks, more likely to be from academia and academic hospitals, suggest everyone should be on salary: They can better control costs (aka your income) and preserve critical services (aka their income).

Clearly we're setting up for a significant power struggle in MA since ~60% of physicians are part of small independent practices yet legislators have decided that more consolidation in the form of ACOs is the solution to controlling costs. 

There's more money in independent practices...sort o

October 29, 2010 — 11:35am ET | By Dan Bowman

Apparently it pays--quite literally--to be part of an independent physician practice as opposed to a hospital-owned practice. According to a Medical Group Management Association survey presented at the group's annual conference in New Orleans earlier this week, the median total revenue at independent practices per full time physician in 2009 was just over $780,000, vs. roughly $448,000 for hospital or integrated delivery system-owned practices, a 44 percent difference reports Medscape Medical News.

But those numbers don't necessarily indicate that independent practices are more lucrative than their hospital/IDS-owned counterparts. Rather, hospital/IDS-owned practices tend to "reallocate income and costs," say the authors of the Cost Survey for Integrated Delivery System Practices: 2010 Report Based on 2009 Data.

"Everyone talks about how hospitals lose money on their own practices," MGMA president and CEO William Jessee said at a press conference. "And yes, they have lower revenue than non-hospital-owned practices, but a lot of this comes from how they account for the revenue. For example, a non-hospital-owned practice may account differently for the ancillaries they purchase, so there are some accounting differences."

In terms of compensation, doctors working in independent practices earned close to 20 percent more than those in hospital/IDS-owned practices. On average, hospital/IDS-owned doctors took home $294,984, compared with $353,549 for non-hospital/IDS-owned docs.

The survey reports statistics from 1,003 practices nationwide.