Practice Economics

Thinking through the State of Hospital Medicine Report


sSHM’s 2016 State of Hospital Medicine Report (SoHM) is now available, and it’s unquestionably the best source of detail regarding how hospital medicine groups are configured and operated.1

The SoHM is published in even years and combines data from two sources:

  • Hospitalist data from Medical Group Management Association’s Physician Compensation and Productivity Survey. Within the SoHM, you will find the same figures for hospitalist compensation, production, and a few related metrics that are from the MGMA survey report.
  • SHM’s survey of hospital medicine groups. This survey drills into significant detail on things like scope of clinical practice, staffing levels, work schedules, bonus metrics, CPT code distribution, roles for NPs and PAs, and the amount of financial support provided to the group.

There are several new topics in this year’s SoHM, including CME allowances, utilization of prolonged service codes, and charge capture methodologies being used by hospital medicine groups. My colleague, Leslie Flores, has been very involved in the survey for 10 years and has written a blog with more details.

One Caveat …

The mix of survey respondents varies and includes a much larger portion of hospital medicine groups employed by multi-state management companies than prior surveys. Even if a parameter hasn’t changed for any hospitalist group, the fact that responses come from different contingents of the hospitalist workforce can result in a different result from one survey to the next. It is difficult to be certain if variations across successive surveys reflect a real change in the marketplace or are a function of variation in the respondent population.

Now let’s review and analyze some of this year’s survey findings for hospital medicine groups caring for adults:

Financial Support Stayed Flat

The amount of financial support provided to a hospital medicine group per FTE has increased significantly in every prior survey. This money typically comes from the hospital that the hospital medicine group serves and is sometimes referred to as the “subsidy.” For hospital medicine groups serving adults, it was $139,000 in 2012 and $156,000 in 2014.

The current survey showed a median of $157,500, essentially unchanged from two years prior. This is either an aberration in the survey (e.g., a result of a different survey population) or an indicator that this amount has begun to level off. Clearly, there is an upper limit to the amount of financial support the marketplace can support, but from my experience working with hospitalist groups around the country, I haven’t seen evidence that we’ve reached that point. I suspect it is an aberration and future surveys will show a continued rising trend, though perhaps not as rapidly as in years past.

Compensation Method Is Evolving

A mean of 14.7% of compensation was tied to production, up from around 10% in prior surveys. And the portion tied to performance (e.g., patient satisfaction, quality metrics) was unchanged at 6%. It’s interesting that despite proliferation of pay-for-performance programs and increasing emphasis on quality and value, it is the productivity portion of compensation that increased. It’s hard to know if that is a meaningful trend.

Compensation Amount Continues to Increase

For hospitalists caring for adults, the median amount of compensation rose to $278,746, up from $253,000 in 2014, $234,000 in 2013, and $221,000 in 2011. These figures come from the MGMA survey, and the financial support figures above come from the separate SHM survey. That means it’s impossible to make firm conclusions about how the numbers do or don’t interrelate.

Don’t forget that surveys report all forms of compensation, including base, production, bonus, extra shifts, and other elements. This year’s $278,746 includes all the bonus dollars earned by each hospitalist in the survey. We can make a very rough guess at the bonus by multiplying the portion of total compensation tied to performance in the SHM survey (6%) by the total compensation ($278,746) from the MGMA survey, which comes to $13,397. But we still don’t know the portion of the total bonus dollars available that represents. My experience is that the total bonus dollars available is around $20,000 or more at most hospital medicine groups. Therefore, a doctor who earned $13,397 presumably didn’t meet all performance goals.

A Deeper Dive into Hospital Medicine Group Finances

It is really interesting to ponder where the dollars come from to fund higher hospitalist compensation if the financial support provided per FTE hasn’t increased. Perhaps hospitalists are generating more encounters, work relative value units (wRVUs), or professional fee collections?

Median professional fee collections were $213,000 this year, up from $151,000 in the prior survey two years ago. This increase could, in theory, fully fund the higher hospitalist compensation without the need for an increase in other sources of revenue.

So why are collections up? It could be because hospitalists are coding the average visit at a higher level: 2.02 wRVUs per encounter this year compared to 1.97 in 2014 and 1.91 in 2012. The survey can’t help distinguish whether this increase is because we’re seeing more complex patients or whether we’re improving our documentation to catch up with the complexity of the patients we’ve been seeing all along. I suspect it is both.

The increase in wRVUs per encounter, however, is offset by a continued downward trend in numbers of encounters: 1,684 this year compared to 1,850 in 2014 and 2,078 in 2012. The total wRVUs generated per hospitalist in a year stayed about the same at 4,247 compared to 4,298 in 2014.

The best explanation for why total collections are up would be that payor rates have increased. But Medicare, which accounts for about 60%–65% of the payor mix for most hospital medicine groups, hasn’t increased rates enough to explain this, and I’m not aware of other payor classes that have increased significantly. Another explanation could be that hospital medicine groups are simply doing a better job with billing and collections and other revenue-cycle management activities, resulting in increased revenue.

I guess it shouldn’t be surprising that some of the survey results don’t seem internally consistent. The data come from two different surveys, the response rate for each question varies, and other issues mean the survey just can’t provide that level of precision. We also need to keep in mind that analyses like I’ve provided here are only very rough explanations. But I think they’re still valuable to think about even if they don’t provide definitive answers. TH


  1. 2016 State of Hospital Medicine Report. Society of Hospital Medicine website. Accessed August 9, 2016.

Dr. Nelson has been a practicing hospitalist since 1988. He is co-founder and past president of SHM, and principal in Nelson Flores Hospital Medicine Consultants. He is co-director for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. Write to him at [email protected].

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