What Are Physicians Worth to Hospitals?

We work with dozens of physicians employed by hospital systems (a radical change from my practice years, when few physicians worked for hospitals).  In almost every instance of contract renewal negotiation, the physicians are told or shown on spreadsheets just how much money the hospital loses on them.

You’d think that any rational hospital administrator would seek to avoid hiring physicians that seem to be such money losers, but this isn’t the case-the opposite is.  Most hospital systems remain eager to grow their employed physician base.

Nowhere in the “see how money you are costing us” discussion is the revenue that results from capturing admissions, ancillary tests and more.  So this article https://www.beckershospitalreview.com/finance/these-10-physician-specialties-generate-the-most-revenue-for-hospitals-051519.html

“These 10 physician specialties generate the most revenue for hospitals” was quite enlightening.

You might pull it out to use in your next contract renewal.

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Steven Podnos MD, CFP

Steven Podnos MD CFP attended the University of Florida College of Medicine and trained in Internal Medicine, Pulmonary and Critical Care Medicine at UT Southwestern in Dallas Texas. He moved back to Florida with his physician wife (ENT) and raised a family while practicing Pulm/CC medicine for over twenty years. During that time, he also started and ran a Hospitalist program for several years. In 2002, Steve began a slow transition towards having a Fiduciary Fee Only Financial planning practice-at first just for friends and family. As the practice grew, he transitioned out of full time medical practice to full time financial planning. Dr. Podnos joined the US Air Force Reserve in 2008 as a critical care physician and flight surgeon. He deployed twice to Landstuhl Army Hospital in Germany as an intensivist during the Afghanistan war in 2009 and 2010, and as a critical care air transport (CCATT) physician in Okinawa in July 2018. His firm, Wealth Care LLC now serves approximately 100 physician families nationwide and another fifty non physician families with both financial planning and wealth management. He is a staunch advocate of independent medical practice, believing that the corporatization of medicine and Electronic Medical Records are both harmful to physicians. 

  1 comment for “What Are Physicians Worth to Hospitals?

  1. Steve O'
    October 13, 2019 at 9:02 am

    As every disillusioned actor who takes a percentage of the net for movies they appear in, such things as cash flow, net income and everything else are bouncy numbers unmoored to reality. “Sorry, chief, the movie lost money.”
    Ayn Rand wisely used trains as an example and metaphor for business, and physics as the logical benchmark of describing trains. It is the locomotive, for instance, that provides all of the motive power for moving the train. All else is attached to the engine. If the energy spent in moving one thing from here to there is fruitful, then it is profitable cargo. If empty boxcars are moved from here or there, what value do they provide?
    Here is where the magicians of the C-suite and government add their enchantments. Why, it is the locomotive which incurs almost all the cost of running a train; but since it carries nothing of value, the locomotive is the biggest financial drain on the system! One can say the same about the physician in Healthcare, who collects no money for the company, but rather incurs inordinate salary and benefit expense. Away with them!
    If a train is pieced together without a locomotive, the passengers are stranded at the station, the cargo rusts and spoils, and no movement takes place. This is a good thing, think the most addled managers – the costs have gone down! And of the rotting fruit and rusting machines, well, things are really no different than they were before these trains were invented, so let the people complain! They are getting maximum efficiency!
    American Healthcare is idling in the switch-yards. The managers imagine that they can get by with a mule team pulling the train – that’s how it used to be done! One merely needs to whip the mules soundly, and replace them when they fall in their traces. Let nature take its course – after all, that’s the way it used to be, before civilization and bright lights and sharp scalpels and all those expensive innovations! Let’s just let nature take its course.
    And the trains plod on, laden with worthless product and shiftless, nonpaying passengers – so make up for the loss of profit in volume of trade! And the public thrills at the new path forward.

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