INTEGRATED DELIVERY SYSTEMS: Losing on MD Practices
The number of integrated delivery systems (IDS) losing money on owned physician practices has jumped, reversing a trend toward profitability seen in recent years, according to Ernst & Young LLP's 1999 Physician Practice Benchmarking Survey, released last week. This year's survey found 96% of IDSs reporting losses on physician practices, for an average deficit of $111,562 per physician. Data from 1998, however, showed only 59% of surveyed IDSs reported losses in their practices, with losses averaging $86,915 per doctor -- a slight drop from 1997 losses of $93,600 per physician. Further, net losses per physician among group practices are "significantly less" than those of IDSs, a finding attributed to lower net revenue generated by physicians in IDS-owned practices. The study attributes this lower revenue in part to the fact that a greater number of IDS-owned practices are primary care only (68% versus 56% for group practices), though does not provide an explanation for the jump in IDS losses overall.
Physician Administrators See Pay Increases
The survey produced some good news for hospitals trying to attract physicians to full-time administrative positions: 1999 data shows full-time administrators making more than those physicians who merely supplemented clinical functions with part-time administrative responsibilities, a reversal from the previous year. In an essay accompanying the survey, Ernst & Young analysts argue this change "should support the recruitment and retention of a broader range of physicians into these important roles." The results are not so good for clinical compensation, however: The 1999 survey shows both productivity gains and the rate of increase in compensation slowing for all physicians, whether owned or independent; primary care specialists, for example, show almost no change in their compensation or productivity from 1998 levels. The largest earnings increase comes among surgical specialists, with compensation levels increasing 5% and clinical productivity growing 6%. Overall, analysts said, the 1999 survey shows it is becoming more difficult for physicians to work profitably under managed care. Survey findings also include data on staffing practices and the structure of physician reward plans, based on data representing more than 20,000 physicians, physician administrators and allied health providers in 129 IDSs and group practices. To purchase the survey, e-mail email@example.com (Ernst & Young release, 10/13).