Over the years the industry has seen a trend for physicians (typically subspecialists) to focus on diversifying their income portfolio by opening their own physician-owned hospitals, surgical centers, diagnostic cath labs, endoscopy suite or other ancillary income devices that bring more income to the physician or their respective practice. This is a direction that many physicians wish to pursue in a new way to increase their percentage of collections on the procedures they perform allowing them to make more while doing less. Additionally since they typically own both the technical and professional fees that go along with any procedure, they are collecting the entire billable amount instead of splitting it with a hospital. I can speculate that what may have caused this initial burst of surgical centers to open may be the declining rate of reimbursement that many physicians have seen for their procedures, or lowered percentage of insurance coverage by Medicare and Medicaid.
In today’s medical landscape physicians are being asked to do more with less. A concept many or potentially all Americans in the workforce have been tasked with over the past decade as companies look to cut expenses and maximize their profit and revenue streams. As the major majority of our physician population continues to age towards retirement, many of our top providers are also looking to maximize their profitability. With falling reimbursements, ever changing RVU’s etc we have created a scenario in which we’ve made it more favorable for physicians to take matters into their own hands. This is of course contradictory to what every CEO in the country might otherwise hope was happening.
In general financial terms the goal of every hospital is to have the primary care physicians refer cases to the specialists in the community to do their procedures and surgeries within the confines of the hospital, thereby employing and putting to good use their facility, staff and support teams that are on duty serving our respective communities. This then ensures there is revenue in the hospital to continue to invest in additional service lines providing the community with the best care options available. What is happening in the medical community is making it nearly impossible for some hospitals to compete with the surgical center across the street that doesn’t have as many cost centers which drain profits, and may not have the added strain of being required to see a certain percentage of ‘no pay’ care. Essentially it has given physicians who chose to do so (not saying that all do), pick and choose their caseloads and payer mix while leaving the less desirable or less profitable cases (time of case vs amount billable) as the burden of the hospital.
This fact is essential in understanding why some hospitals have had such difficulty in recruiting certain specialties in communities that find themselves in this type of political situation. Many recruitment efforts are based on the need of revenue for the hospital versus a community needs assessment of an underserved area. Many physicians are conscious of this when they hear about practice opportunities and may deem them less desirable than other opportunities in the marketplace. Evidence of this truth can be seen as some progressive hospitals have built standalone surgery centers or ancillary income centers and have allowed physicians in the community to “buy into them” thereby giving them added income and ownership, while still keeping a portion of the technical fees within the hospital revenue steam that might otherwise be lost.
So the question remains what is the best way to recruit a physician into your community if you are looking to increase revenue versus addressing the need to reduce patient wait times to see a physician or specialist?
Give one of our market experts a call to speak with you about some of the innovative things we are seeing and helping to implement in different communities just like yours to help differentiate their practice opportunity against the backdrop of all the competing choices available for physicians to pick and choose. 1-866-995-6077
by Nolan Smith, Director of Business Development at Fidelis Partners
phone: (949) 325-7648
email: nsmith@fidelismp.com
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