Hospital Employed, Making Sense of Financials

[Czech777]

I’m hospital employed doc struggling to understand my net operating income.

I have a good sense of revenue (both top line and after-insurance amount paid).

I cannot discern my costs. My hospital can only produce for me a list of “charges.” Charges include straightforward things like lidocaine, dressings, etc. It also includes wildly inflated charges like SCS leads, up-charged at a pre-negotiated supply rate (2x-10x, depending on cost). It also charges my department for my time at a professional rate that is roughly equivalent to what the cpt professional fee is.

I know this sounds insane, but my hospital appears to combine both expenses (lidocaine) and revenue (professional fee, supply fee) into just a mess of “charges” that are all counted against me. The final result is a net negative operating income on nearly every gov’t pay surgery.

Does any one have experience with this? I need a way to cut through this to show the true profitability (or lack of).

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[BobBarker]

The hospital has no way of properly accounting costs. They buy things on “contract” at higher than average cost and later get most of it back via a rebate. There are lots of interesting things they do to make it look like they aren’t making money. I used to have staff assigned to my clinic on the books who only worked at the hospital. They sometimes let vendors destroy them (scs trial leads/rf needles) or do nothing to control costs (looking at you BD spinal needles) when there are plenty of reasonable alternatives. They might assign two rad techs, three scrub techs (one in sterile processing also), 4 RN’s preop, 2 RN’s post op, two RN’s in the room and 4 clerks at the front desk for your procedure day. I routinely had 14 people not counting the ones at the front desk on procedure days with no other cases scheduled that day. Of course none of that is necessary. I have done about 3-4 cases in an hour by myself on one occasion and comfortably can do 40 in a day with one assistant.

So long story short, the only thing that matters is gross revenue inclusive of both your professional fee and the facility fee and the percentage of this total amount that they pay you. If they can’t make any money giving you 20% of the pie that is their own problem.

 

[Greenbayslacker]

Depends on the language in your contract. Post it and we’ll see.

 

[Czech777]

Long story—but no concerns about how this relates to my pay. I’m trying to make department-level decisions that are smarter (Nevro vs MDT), unilateral vs. bilateral knee, trials vs implants, etc.

 

[anonperson]

I’m hospital employed doc struggling to understand my net operating income.

I have a good sense of revenue (both top line and after-insurance amount paid).

I cannot discern my costs. My hospital can only produce for me a list of “charges.” Charges include straightforward things like lidocaine, dressings, etc. It also includes wildly inflated charges like SCS leads, up-charged at a pre-negotiated supply rate (2x-10x, depending on cost). It also charges my department for my time at a professional rate that is roughly equivalent to what the cpt professional fee is.

I know this sounds insane, but my hospital appears to combine both expenses (lidocaine) and revenue (professional fee, supply fee) into just a mess of “charges” that are all counted against me. The final result is a net negative operating income on nearly every gov’t pay surgery.

Does any one have experience with this? I need a way to cut through this to show the true profitability (or lack of).

You will never get an accurate number. You need administration like the CFO who is interested enough to get into the weeds to get such granular information. This rarely happens.

Them showing a negative operating income is a feature not a bug in their eyes.

 

[Czech777]

You will never get an accurate number. You need administration like the CFO who is interested enough to get into the weeds to get such granular information. This rarely happens.

Them showing a negative operating income is a feature not a bug in their eyes.

This is the tea I came for. I understand a motivation of the hospital to inflate expenses to an insurer that then pays a % of total.

But is there another reason to show loss?

 

[drusso]

The hospital business is a boondoggle. They don't know their costs, and most importantly, they don't want YOU to know your cost. Why?

Value = Quality/Cost.

You know that you're a quality physician because you've worked hard to achieve your goals. You might be surprised how little your direct cost is to your employer in the Big Picture. You are not a night-school MBA drop-out who can't make it in any other sector except health care. Therefore, if you knew your VALUE, especially your physician enterprise VALUE, then you could negotiate on a level playing field. They will always fight tooth and nail to never let this happen.

They will never love you back.

 

[paindoc007]

To be clear, NO ONE in our business will love you back.

 

[drusso]

To be clear, NO ONE in our business will love you back.

You've never had a mentor, an ally, or a role model?

 

[lobelsteve]

You've never had a mentor, an ally, or a role model?

False profits (prophets)

 

[Czech777]

I appreciate it. The take away is to accept net negative operating income as long as it doesn’t change my pay.

I had a lofty goal of demonstrating department efficiency that is scalable, but I will let that sit for now.

 

[cowboydoc]

This is the tea I came for. I understand a motivation of the hospital to inflate expenses to an insurer that then pays a % of total.

But is there another reason to show loss?

As a nominally non-profit organization, they are limited in the net operating “income” they can report. They “must” have significant burn to hide all the money you make them. This piece has nothing to do with bloated fees for insurance payments you describe.

 

[Dr. Ice]

The hospital business is a boondoggle. They don't know their costs, and most importantly, they don't want YOU to know your cost. Why?

Value = Quality/Cost.

You know that you're a quality physician because you've worked hard to achieve your goals. You might be surprised how little your direct cost is to your employer in the Big Picture. You are not a night-school MBA drop-out who can't make it in any other sector except health care. Therefore, if you knew your VALUE, especially your physician enterprise VALUE, then you could negotiate on a level playing field. They will always fight tooth and nail to never let this happen.

They will never love you back.

Im just a cog..Im learning to have love for it. Im a cog in a wheel of a ship that tanks everyday, a private practice ortho with bad culture that can’t be escaped but I admire the resiliency and willingness to never say die. It’s either this or my complacency or jade of prior experiences that keeps me in it. That and life situations stagnate me where I’m at. I know “the entity will never love me back.”

I can’t imagine what it takes to be a solo pain doc or small group pain practice right now.

Drusso, do you ever ask the question, do you love yourself back?

 

[SSdoc33]

Im just a cog..Im learning to have love for it. Im a cog in a wheel of a ship that tanks everyday, a private practice ortho with bad culture that can’t be escaped but I admire the resiliency and willingness to never say die. It’s either this or my complacency or jade of prior experiences that keeps me in it. That and life situations stagnate me where I’m at. I know “the entity will never love me back.”

I can’t imagine what it takes to be a solo pain doc or small group pain practice right now.

Drusso, do you ever ask the question, do you love yourself back?

its a 5 am - 9pm job that is the most gratifying thing you will ever experience.

you will never know the true meaning of happiness until you own your own business and have an entrepreneurial spirit

 

[Dr. Ice]

its a 5 am - 9pm job that is the most gratifying thing you will ever experience.

you will never know the true meaning of happiness until you own your own business and have an entrepreneurial spirit

😜

 

[Czech777]

As a nominally non-profit organization, they are limited in the net operating “income” they can report. They “must” have significant burn to hide all the money you make them. This piece has nothing to do with bloated fees for insurance payments you describe.

Got it. How’d you learn this? I was completely in the dark. I’d love to educate myself.

 

[cowboydoc]

Got it. How’d you learn this? I was completely in the dark. I’d love to educate myself.

I worked at a non-profit in a previous life. I've paid attention over a decade of employment in a physicians group associated with a hospital system. I watched as my ortho "partners" ended up leaving (read "forced out of") the system and going private. I did the math on going private vs. staying in the system. I've tried to get various things done in the system and recognized quite perverse incentives displayed by various players. Mostly I just listen to @drusso

I'd recommend Dr. Bricker and his channel AhealthcareZ, who is one of the best I've seen at objectively discussing these subjects. https://www.youtube.com/@ahealthcarez/videos

 

[drusso]

Im just a cog..Im learning to have love for it. Im a cog in a wheel of a ship that tanks everyday, a private practice ortho with bad culture that can’t be escaped but I admire the resiliency and willingness to never say die. It’s either this or my complacency or jade of prior experiences that keeps me in it. That and life situations stagnate me where I’m at. I know “the entity will never love me back.”

I can’t imagine what it takes to be a solo pain doc or small group pain practice right now.

Drusso, do you ever ask the question, do you love yourself back?

Rebel Physician

www.rebelphysician.com

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[drusso]

I worked at a non-profit in a previous life. I've paid attention over a decade of employment in a physicians group associated with a hospital system. I watched as my ortho "partners" ended up leaving (read "forced out of") the system and going private. I did the math on going private vs. staying in the system. I've tried to get various things done in the system and recognized quite perverse incentives displayed by various players. Mostly I just listen to @drusso

I'd recommend Dr. Bricker and his channel AhealthcareZ, who is one of the best I've seen at objectively discussing these subjects. https://www.youtube.com/@ahealthcarez/videos

 

[anonperson]

This is the tea I came for. I understand a motivation of the hospital to inflate expenses to an insurer that then pays a % of total.

But is there another reason to show loss?

I don't have a firm reason but I think it is a combination of things:

1. Incompetent administration: I know people $hit on physicians for not being that smart but holy hell, the stupidity of your typical online MBA administrator is something else.

A colleague of mine sold his practice (OBGYN) to the local health system as he only wants to practice for a few more years. He was very busy and collecting about $80k gross a month. Now that the health system has taken over, they are collecting half that due to sheer incompetence. Literally leaving hundreds of thousands of dollars on the table.

2. There may be a sinister motive of showing certain things as unprofitable for future negotiations. Let's say OR time becomes more limited and another more lucrative/desired specialty wants in. I wouldn't put it past admin to pull bogus unprofitable numbers out during future negotiations.

When I was renegotiating with a health system at my old job. They pulled bogus numbers and stated that my colleagues and I weren't profitable which justified a lower salary even though we worked like dogs.

3. If health system is non profit, I always feel there is shady accounting to show extra losses for the IRS and to help beg for more public funding etc.

 

[paindoc007]

You've never had a mentor, an ally, or a role model?

Ha. If you’re someone looking for a mentor or role model to love you back, then you’re in for one. How to raise a woke kid 101. Every situation in life you should be showered in hugs kisses and lots of love. It’s all about your feelings. Good job.