Integrated health care economics--part 1: are specialty physician services revenues reliable predictors of community health system financial performance?

Clinical service line strategies are popular in community health system business development planning and management. Specific clinical service lines are indentified for growth, development and strategic investments such as specialized facilities and clinical and information technologies. Physician recruiting plans are developed along specialty service lines to support these strategies; e.g., cardiovascular, cancer care, orthopedics, neurosurgery and other surgical and procedural specialties are often emphasized in specialtyfocused strategic plans. Strategic and related business and financial assumptions are that physician services drive “downstream” inpatient and outpatient revenue that translates reliably to both service line and health system profits. It is often assumed that incremental dollars generated on relatively fixed cost structure are reliably profitable. Consequently, increased physician professional services dollars (i.e., physician services production) are expected to generate these downstream profits. In other words, an incremental, busy physician specialist in a key strategic clinical service line is always a profitable investment. Not an all together unreasonable assumption given the conventional wisdom driving strategic service line strategy and management for today’s community health systems. Purpose of the study