Average Revenue Generated by Primary Care Physicians and Specialists
Primary care — defined as family practice, general internal medicine and pediatrics – providers draw in their fair share of revenue for the organizations that employ them, averaging nearly $1.5 million for the practices and health systems they serve. Specialist physicians typically generate even more revenue for their affiliated hospitals than primary care physicians, as might be expected, but the point here is that caregivers drive enormous economic benefits to the surrounding areas they serve.
The American Medical Association points out that physicians generate $1.6 trillion in economic activity nationwide and support more than 10 million jobs just by doing their own jobs. According to these estimates, the average physician contributes more than $2.2 million in economic output and supports 13 jobs and $1.1 million in wages and benefits. Likewise, each physician supports more than $90,000 in local and state tax revenues and contribute to a total of $65 billion is local and state tax revenues nationwide.
Obviously, that’s a tremendous impact on an economy.
Caregivers drive economies and grow revenue
Every single dollar applied to physician services supports another $1.62 in other business activity. Physicians enable economic growth, opportunity and prosperity. “Physicians carry tremendous responsibility as skilled healers, trusted confidants and patient advocates, but their positive impact isn’t confined to the exam room,” the AMA said. “Physicians are strong economic drivers that are woven into their local communities by the jobs, commerce and taxes they generate. These quality jobs not only support the caring role of physicians, but also generate taxes that support schools, housing, transportation and other public services in local communities.”
Primary care continues to be recruited heavily as more hospitals and health systems procure practices. As these organizations add these groups to their umbrellas – in an effort to place these organizations ahead of the value-based care curve – they drive revenue. Of particular impact are surgery services — particularly orthopedic, neurological and general; each of these specialties can generate in excess of $2 million net a year for their affiliated hospitals. Likewise, gastroenterologists, hematologists/oncologists, obstetrician/gynecologists and urologists all generate an average of about $1.5 million or more in net revenue on behalf of their affiliated hospitals. Average annual revenues generated by non-invasive cardiologists, neurologists, ophthalmologists, psychiatrists, pulmonologists and otolaryngologists all exceeded $1 million in net generated revenue per year, per reports.
The shortage of care ensues
Despite these rosy revenue targets, health systems, hospitals and medical centers are competing for an ever-decreasing physician population. In 2015, there were nearly 1.1 million doctors of medicine all over the United States. This figure included some 160,000 inactive and some 55,000 unclassified physicians. However, the U.S. is expected to experience a shortage of between 40,800 and 104,900 physicians by 2030, according to a new study commissioned by the AAMC. In this particular study, the numbers of new primary care physicians and other medical specialists are not keeping pace with the demands of a growing and aging population.
“There is going to be a significant workforce shortage under all of the likely projections. We see that, quite frankly, only getting worse as the population ages,” said Janis M. Orlowski, MD, AAMC chief health care officer.
For primary care, the estimated shortage will be between 8,700 and 43,100 physicians by 2030. The primary factors driving demand are population growth and an increase in the number of older Americans, according to the study. The total U.S. population is expected to grow by about 12 percent by 2030. Also by 2030, the number of U.S. residents aged 65 and older is expected to increase by 55 percent, and the number of people aged 75 and older will grow by 73 percent during the same period.
Baby Boomers turning 65 (more than 10,000 a day) often require specialist physicians. From a revenue perspective, those patient 65 years old and oldergenerate the most income for physicianseven though this segment represents a minority of the total U.S. population. These individuals typically have multiple health problems needing to be managed, and require assistance from more specialists, including orthopedic surgeons, cardiologists, ophthalmologists, urologists, pulmonologists, psychiatrists and neurologists.
Health systems will need to be persistent in their recruiting efforts to secure caregivers to meet demand.
Filling care gaps now
The healthcare ecosystem relies on physicians, but as resources tighten and jobs become more competitive, other caregivers will be more in demand and will be tasked with more responsibility. For example, physician assistants and nurse practitioners will be more heavily relied upon to advance care and treat patients. Even now, we are receiving calls from our clients to fill these particular needs. Other specialties remaining in high demand include psychiatrists, orthopedic surgeons, neurologists, gastroenterologists and cardiologists.
Most recruitment requests come from health systems rather that private practices. Hospitals groups and health systems are making up nearly 50 percent of requests for care employees. Many of the requests we receive are for the usual suspects – primary care — but there are some surprises based on our experiences. For example, following family medicine is psychiatry and internal medicine. However, pediatric caregiver searches are robust as are those for neurology and gastroenterology professionals.
Salaries ranges vary greatly based on region and specialty. For those in family practice, we see the highest rates generally throughout the Southwest; psychiatry is highest in the Southeast; and internal medicine in the Southwest. Despite the push by hospitals to hire more physicians, those in family practice actually can make more per year in solo practice, however: The more risk, more reward mantra seems to apply here. Alternatively, psychiatrists and internists tend to make more when employed by hospitals and health systems.
Signing bonuses are industry standard for those recruited. About 75 percent of the searches we conduct include some sort of signing bonus and even a relocation allowance. Additionally, in almost every case, employers agree to contribute to their employee’s continuing medical education.
Average salaries for caregivers continue to increase for those involved in providing care, including nurse practitioners and PAs. The number of searches we conduct for these professionals is increasing, too, and we expect this trend to continue for the long term.
According to the American Academy of Physician Assistants, 90 percent of hospitals report that they employ PAs and the majority are actively recruiting them, while almost 60 percent say that PAs within their organizations will take on expanded roles. These individuals are conducting primary care roles in many organizations, including urgent care centers, retail clinics and federally qualified health centers, all of which we expect will continue to expand.
Despite regional disparities, hospitals tend to offer higher salaries to the caregivers they recruit. Academic institutions and community health centers typically offer less, primarily because of their limited budgets.
Competition drives salaries, too, obviously. The number of physicians per capita in the Northeast United States has led to steeper competition for those seeking jobs there, which have suppressed salaries in the area (generally).
Where there is the most demand for care
No surprise here, by far the most demand for physicians and other caregivers is in family medicine. This includes primary care physicians, family physicians, general internists and pediatricians, driven in part by an aging and growing population. However, perceptions of relatively low compensation for these specialists keeps some med students from pursuing these paths. Pediatrics, for example, is a lower revenue driver for healthcare organizations, and this specialty (and those in primary care) also are perceived as requiring a high level of personal commitment required, further exacerbating shortages to come.
All things through physicians
Physicians remain at the heart of the care cycle. Driven by population growth and aging, the total number of office visits to primary care physicians is projected to increase from 462 million in 2008 to 565 million in 2025, the Annals of Family Medicine notes. Given statistics such as these, it’s little wonder that the healthcare sector employs about 10 percent of the United States’ population nor it any surprise that the sector will likely generate more than 20 percent of the nation’s GDP by 2025. Physicians and their supportive caregivers are at the heart of this growth.
It is worth noting, too, that the U.S. is spending far more on mental health treatment than in the past. For example, in 2013, nearly $200 billion dollars was spent on mental disorders in the U.S. About one in five adults in the U.S experience mental illness in a given year, and only 40 percent of those receive mental health services. Emergency department visits for suicidal thoughts more than doubled during a recent seven-year period, according to a 2017 Agency for Health Research and Quality brief.
The supply for such these clinicians does not meet demand. Recent estimates suggest that there are 30,000 psychiatrists in active patient care in the U.S., but there is preference by psychiatrists for outpatient practice settings so many care organizations are facing increasingly difficulties when recruiting to inpatient settings.
Finally, physicians are not spread equally throughout this great nation. They tend to congregate in urban centers. Demand for physicians remains high, especially in smaller communities, but larger urban areas are fighting for many of the same resources that those health systems in smaller areas are. They also do not come in the number required for the most efficient healthcare system. In the current and future landscape, physician recruiting remains a challenge not only in small and mid-sized communities, but in cities as well.
Where does this leave us?
In some regard, we must start from where we are now: Actively identifying and recruiting qualified individuals to fill these needs in an ever-increasingly competitive marketplace while encouraging individuals to seek careers in the field.
With regard to what we can do now, physician recruiting remains vital to helping health systems and care organizations meet supply. MedSource Consultants is a leader that helps our clients meet current and future demand. We understand that the organizations we work with seek the most qualified caregivers available and while physician and healthcare recruiting can be a difficult undertaking for healthcare organizations, we are able to navigate the increasing number of requests and help our clients alleviate their growing pains in regard to this important, but changing industry.