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Competition causes revenue decline for hospital-affiliated MDs

Hospitalist Leadership Connection, May 23, 2007

Physicians and hospitals traditionally have had symbiotic, if strained, relationships. But market forces and recent technological advances have weakened hospital-physician relations, pushing hospitals and physicians to become competitors, rather than allies, in many regions.

Because services once performed only in hospitals now are safely performed in ambulatory surgery centers and other outpatient settings, more physicians are drifting away from hospitals to become owners of entities that directly compete with hospitals for revenue.

This increased competition has contributed to a decline in the amount of revenue hospitals bring in from affiliated physicians, suggests the 2007 Physician Inpatient/Outpatient Revenue Survey conducted by Merritt, Hawkins & Associates, an Irving, TX-based physician recruiting firm.

Physician-generated revenue dropped from $1,855,773 in a 2004 survey to $1,496,432 in the 2007 survey--a decline of 19%. PCPs generated slightly less revenue than medical specialists, and both saw similar declines from 2004, the last time Merritt Hawkins conducted the survey. PCPs generated $1,433,532, down from $1,596,852, and specialists generated $1,509,910 on average in the 2007 survey, dropping from $1,915,524.

Editor's note: Excerpted from the June issue of Physician Compensation Report (PCR), published by HCPro, Inc. For more information or to subscribe to PCR, go to www.hcmarketplace.com/prod-3285.html.

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