Are Hospital Value Increases Keeping Pace with Price?

A factor might be that while the number of hospital inpatient days has fallen or remained flat, the cost per hospital stay has increased, a study shows.

The results of a study recently published by FierceHealthcare serve as a reminder for physician leadership that providers will and necessarily must do everything they can to keep revenue growth healthy.

Merritt Hawkins, in its 2019 Physician Inpatient/Outpatient Revenue Survey , notes that despite efforts to lower revenue generated by physicians using value-based payment models, the amount of net revenue physicians generated for hospitals by specialty has gone up substantially since 2016 for most medical specialties studied.

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One factor driving these increases could be that while the number of hospital inpatient days has fallen or remained flat recently, the cost per hospital stay has increased, the researchers say.

The numbers show that at least early value-based models aren't doing as well as industry experts had hoped at bending the cost curve. Put downward pressure on the volume of medical services delivered, and all things being equal, price simply rises. No profit-driven entity can tolerate watching its revenue stream decrease without feeding the bottom line in some other way.

It is worth asking whether health care businesses want to redistribute where these net revenue increases emerge. For example, are hospitals delivering increases in value anywhere near the pace at which their prices are increasing? If the growth rates cited by the Merritt Hawkins study are any indication, it's unlikely.

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Ultimately, if organizations assume that the overall cost of health care is not likely to fall much in the near future, they can at least decide if the way they are spending makes sense. Maybe value-based models move the industry in this direction, but focusing strictly on saving money doesn’t work either.

The Merritt Hawkins study estimated that physicians generate an average of $2.38 million a year for their affiliated hospitals. This represents a 52 percent increase from the roughly $1.5 million they generated in 2016, which the survey was last conducted.

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Researchers also found that cardiovascular surgeons generated the most revenue for hospitals, or almost $3.7 million a year. Invasive cardiologists came in at a close second at $3.5 million a year, followed by neurosurgeons at $3.4 million and orthopedic surgeons at $3.3 million.

The study showed that family physicians generated an average of $2.1 million in net revenue for affiliated hospitals and general internists $2.7 million dollars in net revenue a year.