An overview of physician payments and cost per service (2024)

FAQs

An overview of physician payments and cost per service? ›

Service utilization costs

The dominant mode of physician payment in the US is fee-for-service (FFS), representing over 90 percent of primary care practice revenue³ predominately for office visits. Face-to-face patient encounters have long been a core component of primary care services and remain highly valued by both patients and physicians.

Payment for healthcare is managed in various ways. The main categories of payment systems are salary, capitation, bundled payment, global budget and fee-for-service. Most countries have mixed systems of physician payment.

Private insurance was the primary expected source of payment at nearly one-half (45.9%) of all office- based physician visits, followed by Medicare (30.8%), Medicaid (11.7%), and no insurance (4.0%, estimate does not meet statistical reliability criteria) (Figure 2, Table 2).

The average revenue generated for all physicians is $1,713,611. An orthopedic surgeon generates a range of $2,776,605 to $3,002,341 a year on behalf of a health system, an invasive cardiologist $2,148,134 to $2,556,714, a neurosurgeon $2,123,810 to $2,778,917 and a general surgeon $2,476,691 to $2,512,973.

‐ Fee‐for‐service: healthcare providers are paid for each service they provide to the patient. ‐ Salary: healthcare providers are paid based on the time they spend at work. ‐ Capitation: healthcare providers are paid according to how many patients they have. ‐ A mix of these different approaches.

Eight basic payment methods are applicable across all types of healthcare. Each method is defined by the unit of payment: 1) per time period, 2) per beneficiary, 3) per recipient, 4) per episode, 5) per day, 6) per service, 7) per dollar of cost, and 8) per dollar of charges.

Each method is defined by the unit of payment (per time period, beneficiary, recipient, episode, day, service, dollar of cost, or dollar of charges). These methods are more specific than common terms, such as capitation, fee for service, global payment, and cost reimbursem*nt.

A method in which doctors and other health care providers are paid for each service performed.

Which doctor is most payable? ›

1. Medical providers are paid for quantity, not quality. Most health insurance companies—including Medicare—pay doctors, hospitals, and other medical providers under a fee-for-service system that reimburses each test, procedure, or office visit. That means the more services they provide, the more money they receive.

Medicaid/CHIP coverage estimate includes all means-tested public coverage (e.g., state and locally financed public coverage). Private health insurance is the predominant source of health insurance coverage in the United States.

In order to qualify as a millionaire, you must have assets worth $1 million or more. The 2021 physician wealth report showed that 56% of physicians reported a net worth of over $1 million. The majority of family physicians become millionaires by the age of 55 — only 11% had a $1 million net worth before 45.

The University of California's health system paid 113 medical professors at least $1 million in total pay last year. Only 12 of those high-earning health professionals were women, according to a Sacramento Bee analysis of 2022 payroll data from the UC Office of the President.

By the time physicians reach their forties, it is very possible to achieve millionaire status, with some physicians even becoming multimillionaires. This trend continues with doctors in their fifties, with 60% of physicians' worth at least $1 million.

Four payment methods (fee-for-service, discounted fee-for-service, capitation, and salary) and three payment adjustments (withholds, bonuses, and retrospective utilization targets) are the basis for nearly all contracts between health plans and your physicians, and they are described below.

These physicians typically are compensated in one of two ways: (1) a fixed salary or (2) a base salary with the opportunity for supplemental earnings from medical practice. The degree of medical school control over practice earnings varies a great deal.

Healthcare is paid by reimbursem*nt, most often on a fee-for-service basis by an insurer, government payer, or yourself.