Ortho surgeon in the comments is spot on:
"When most physicians were in independent practice, this phenomenon did not exist. The harsh reality is for most physicians, the costs of maintaining an independent practice have become cost prohibitive. Physician reimbursement has been stagnant or decreasing for decades while expenses have increased. In my city, at the time of my retirement from surgical practice, the annual business costs including rent, supplies, office staff, electronic medical record, health, liability and malpractice insurance were 250- 300K/ year per surgeon before taking one dime in salary. Unfortunately, the fees paid for surgical procedures dropped 60% by Medicare over the same time period and nearly as much for private insurance. Medicaid was worse. Passing the additional costs of care, not covered by insurance, to the patient, commonly known as balance billing, is illegal in my state. Most physicians worked harder and longer to make up the difference but that can only go so far. The logical solution for many has been to become employed by a hospital system. Most are paid a salary based on expectations of a certain level of "productivity". The business costs of providing care which increase every year, are covered by the hospital system which, unlike the doctor, does have the latitude to charge additional fees to the patient. This is a simplistic explanation of a complex problem but it's the sad reality for doctors. I'm glad I'm done. I loved my job but the business side not so much.
I suspect my orthopedic colleagues would love to receive even half of what you think is the fee for a knee replacement. In reality, Medicare compensates the surgeon about $1450 for a total knee replacement which includes any outpatient services provided by the surgeon for the first 90 days after the procedure. The hospital probably receives a payment in excess of $50,000 or more. Joint replacements are generally profitable for most hospitals. For the surgeon, the reimbursement is inadequate to support an independent practice. Again, another reason why independent practice is dying and surgeons are choosing to be employed. The hospitals have the money.
You are correct. Hospital fees have generally increased over time while physician reimbursement decreased. which is yet another compelling reason to be come employed."
"below market rates" that's a good one....walk into a GI clinic, look around the waiting room and ask yourself how many of those people have a spare 700+ bucks they could scrounge up to spend on an EGD that's being done for "reflux".
