Survey Debunks Myth that Physicians Make Big Bucks on Medical Orders

Share Article

At most, 6.2 percent of physicians’ total compensation comes from the tests, prescriptions, procedures and admissions they order, according to a new survey by healthcare staffing and technology company Jackson Healthcare.

News Image
There are two primary reasons physicians order tests and treatments they consider medically unnecessary. They are personally financially liable for patient awards and they want to avoid the hassles of going to court.

At most, 6.2 percent of physicians’ total compensation comes from the tests, prescriptions, procedures and admissions they order, according to a new survey by healthcare staffing and technology company Jackson Healthcare. The online survey of 1,512 physicians explored trends in their fixed and variable compensation sources.

Thirty-six percent of respondents reported that their total compensation was from fixed sources, which consisted solely of salary, hourly rate and/or stipends that do not vary with productivity.

The majority of physicians surveyed (82 percent) reported receiving no compensation from the tests, prescriptions, procedures and admissions they order. Their compensation consisted of a combination of fixed sources (salary, hourly rates or stipend) and variable sources, which was defined as bonuses, productivity incentives, profit from ownership or any other compensation over and above fixed salary or hourly rates.

When looking at physicians’ overall compensation, direct income from medical orders constituted 6.2 percent of their total compensation and consisted of the following:

  •     0.5 percent from charges from prescriptions
  •     1.0 percent from charges from lab tests
  •     1.1 percent from charges associated with hospital admission
  •     1.3 percent from charges associated with facility fees for surgeries
  •     2.3 percent from charges from diagnostic imaging

These results challenge critics’ claims that, if protected from lawsuits, physicians won’t stop practicing defensive medicine because they profit handsomely from their medical orders. Defensive medicine describes the ordering of medically unnecessary tests, procedures and consultations in an effort to protect the prescribing physician from malpractice lawsuits.

“Many outside the industry believe that physicians make a lot of money on the tests, prescriptions, procedures and admissions they order,” said Richard Jackson, chairman and CEO of Jackson Healthcare. “The reality is that most (82 percent) do not make any money from their orders. For the remaining that do, it constitutes a fraction of their total compensation.”

Jackson believes that this reflects a shift that has occurred over the past 20 years, with the institution of Stark Law, which governs how physicians refer patients. “The regulatory environment today makes it very difficult for physicians to profit from their medical referrals and orders,” said Jackson.

Jackson also said the survey data reflects the trend of new physicians choosing employment over independent practice.

Opponents of medical malpractice reform argue that physicians have a financial incentive to order unnecessary tests and treatments because they profit from these activities. Jackson believes the survey proves this not to be the case.

“There are two primary reasons physicians order tests and treatments they consider medically unnecessary,” said Jackson. “They are personally financially liable for patient awards and they want to avoid the hassles of going to court.”

For a detailed summary of the survey data, read Physician Compensation Survey: Fixed vs. Variable Sources.

Survey Methodology
In April 2011, Jackson Healthcare conducted a web-based survey of 1,512 physicians. The survey has an error range of +/- 1.6 percent, at the 95 percent confidence level.

If physicians indicated that a portion of their compensation was variable, they were asked a series of questions to report the percentage of their income that came from various variable compensation sources: productivity bonuses, profit from practice ownership, charges from diagnostic imaging, charges associated with facility fees from surgeries, charges associated with hospital admissions, charges from lab tests, and charges from prescriptions. Percentages of variable compensation were presented in multiple choice questions with ranges. The survey results were calculated by utilizing the top percentage in each range, for a worst-case scenario computation. For more information on Jackson's Market Research, visit JacksonHealthcare.com/Research.

About Jackson Healthcare
Founded by the healthcare innovator Richard Jackson, Jackson Healthcare serves more than two million patients in nearly one thousand hospitals each year. The Jackson family of companies provides physician and clinician staffing, anesthesia management and healthcare information technology solutions proven to improve clinical and financial outcomes, as well as increase operational efficiency. Jackson Healthcare has earned national media coverage for its physician polls and champions local and international charitable work. In addition, Jackson has been recognized as one of the largest and fastest growing staffing companies in the country by the Inc. Magazine, Atlanta Business Chronicle, Georgia Trend and Staffing Industry Analysts. For more information about Jackson and its companies, visit JacksonHealthcare.com.

###

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Keith Jennings
Visit website