Hospitalist salaries – when supply and demand works

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Category : Medical Rants

 

Society of Hospital Medicine (SHM) 2007-2008 Productivity and Compensation Survey

In 2006, there were approximately 15,000 hospitalists in the country. Today, the number has risen to an estimated 20,000. The highest number of hospitalists are found in the East (31%) and South (28%) compared with the Midwest (20%) and West (21%). Since the 2005-2006 survey, the percentage of hospitalists in the East has increased slightly, whereas the percentage of hospitalists in the Midwest has decreased slightly. Hospitalists are still found in all parts of the country.

Hospitalist groups continue to rapidly expand in size. Over the past year, hospitalist programs have experienced a mean growth of 31% in number of hospitalist full-time equivalents (FTEs). This rate of growth is very similar to the results of the 2005-2006 survey, which reported an annual growth in hospitalists’ staffs of 29%.

Hospital medicine groups are maturing and expanding their work beyond the confines of 1 hospital: The median age of hospitalist groups is now 5 years. Thirty percent of groups cover more than 1 hospital. The mean number of hospitals supported by a hospitalist group is 1.9.

The median size of hospitals in which hospitalists work is 310 beds, and they include all types:

* 56% of hospitalists work in teaching hospitals;

* 83% work in nonprofit hospitals;

* 12% work in for-profit hospitals; and

* 5% work in government hospitals.

Hospitals remain the single largest hospitalist employer, and the percentage of hospitalists who are employed by hospitals continues to rise, whereas the percentage of hospitalists who are employed by multispecialty groups continues to fall. In the 2005-2006 survey, 34% of hospitalists worked for hospitals and 14% worked for multispecialty groups. The current survey shows the following:

* 40% of hospitalists are employed by hospitals;

* 24% of hospitalists are employed by academic centers;

* 14% of hospitalists are employed by local hospitalist-only groups;

* 11% of hospitalists are employed by multispecialty groups; and

* 8% of hospitalists are employed by management companies.

The overwhelming majority of hospitalist programs continues to operate with a deficit. The mean deficit per hospitalist group is $954,000 and the median deficit is $750,000. The mean deficit per hospitalist group continues to grow. Considering these increasingly large deficits, it is shocking to learn that 37% of hospitalist group leaders are unaware of their group’s annual expenses, and 35% of hospitalist group leaders do not know their group’s revenue. What is not clear, however, is whether these leaders chose not to divulge this information or whether there is, indeed, widespread ignorance among hospitalist group leaders with regard to their group’s financial matters. Of those who did report their group’s finances, 85% reported a deficit.

An overwhelming majority of hospitalist programs continue to receive financial support. In the 2003-2004 survey, the mean financial support received by hospitalist groups was $400,000. This figure rose to $549,000 in the 2005-2006 survey and to $949,410 in the most recent survey. Currently, 91% of hospitalist groups receive financial support. Financial support includes payment subsidies, services in kind, or case rate reimbursement. Sources of support include the following:

* Hospitals, $897,750;

* Physician organization, $38,550;

* Academic organization, $1850; and

* Other organizations, $11,260.

The mean amount of support per hospitalist FTE is $97,375. This has risen sharply since the 2005-2006 survey when the mean support per FTE was $58,400. I believe that this reflects the rise in hospitalist compensation without a corresponding increase in clinical revenue.

Hospitals help pay hospitalist salaries!  Why?  Obviously hospitals believe that they need to spend this money. 

Many outpatient physicians choose their admitting hospital because of the hospitalists.  Many surgeons (especially orthopedics and neurosurgery) want hospitalists to provide every day care for their patients, allowing the surgeon to spend more time operating and less time worrying about the other aspects of hospital care.  Many hospitalist groups focus on improving quality, and decreasing length of stay.

As a new designation, hospitalists have done a brilliant job of negotiating with hospitals.  Since the demand for hospitalists greatly exceeds current supply, hospitals pay.

Outpatient physicians should have the same negotiation opportunity.  One could argue that the retainer medicine movement represents a supply and demand situation.  I would prefer if insurers began to offer outpatient physicians more money to see patients.  Perhaps they will as the demand for "primary care" is increasing rapidly.  And while that demand increase, the supply decreases.  I suspect that eventually the laws of economics will improve payment for outpatient visits.  If not, we will continue to have a dwindling supply of outpatient physicians – as many move to well paying hospitalist jobs.

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Comments (1)

The fact that hospitals see value in hospitalists is a striking indication that hospital internists/FP’s save money when a head of the ship takes control. Insurance companies don’t see the benefit of prevention because it happens years down the road when most of their premium paying customers have moved on. For them to pay more now only to have another insurance company reap the benefits of prevention would be counter productive to their bottom line. Hospitals see the benefit here and now. And that’s why hospitalist salaries are soaring above their respective counterparts.

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