The changing payment model for patient care has made hiring more primary care physicians and adding specialty practice groups a strategic initiative for most health systems. But, unless a health system is set up to fully track the downstream revenue these physicians generate when measuring overall financial performance, the outcomes may not match what was anticipated within the strategy.
The challenges of using traditional accounting methodologies to measure financial performance were demonstrated in the results of a survey which found the average hospital-employed physician generates a net operating loss of roughly $177,000 per year.*
To gauge if your organization is correctly tracking the downstream revenue generated by employed physicians, answer “yes” or “no” to the following:
- Each patient is assigned a unique identifier that is used for all services and billing across the entire health system.
- All hospital inpatient and outpatient billing data is consolidated with physician fee data and can track a unique patient’s activity across the system’s inpatient, outpatient, post-acute and physician practice services.
- All patient access locations are identified to determine where to begin measuring downstream revenue.
- Every patient’s services — including diagnostics, therapy and pharmacy — are captured at the transaction level.
- Each physician’s financial performance (for office, inpatient, outpatient and post-acute services, and for patient visits, gross charges and net revenue) can be compared to industry benchmarks from other hospitals or health systems.
- Utilization of resources is measurable by physician and service line group.
- Data is available by physician, specialty, location, service line, payer or any other demographic captured by transaction and measured in dollars.
- Data demonstrating the financial contribution of each employed physician can be accurately measured.
Scoring
- If you answered yes to at least seven questions, great job! Your health system is well positioned for success in the transition to value-based care.
- If you answered yes to four to seven questions, you are likely missing important data points that would enable you to better manage practice performance.
- Answering yes to less than four questions means that your health system is missing the critical data points necessary to manage the performance of your employed physician practices and shape strategy in this important area of the business.
You’ve invested significant dollars in employing physicians. They are one of your most valuable assets – if you know how each is contributing to your system’s performance. The good news is there are several great tools available that can help you track and analyze downstream revenue. Armed with that, your leadership team can confidently demonstrate value and take actions to optimize the performance of employed physicians.
*Medical Group Management Association 2013 Cost Survey, Net Income or Loss per Physician FTE by Hospital/IDS owned (All Multispecialty), Median Value (-$175,463)