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Author: yodaorange Big red star, 1000 posts Feste Award Nominee! Feste Award Winner! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 77137  
Subject: Way OT: Doctor/Hospital Revenue Date: 3/17/2011 8:45 PM
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This is the first of a two part post. The 2nd part is 100% REIT related. This part is 100% NON-REIT related, but is something that I found fascinating. Recall that I spend a reasonable amount of time each day researching municipal bonds. As part of the research, I was looking at the most recent financial disclosure for a muni bond backed by hospital revenue. The disclosure listed the hospital revenue generated by the top ten physicians. These are NOT the doctor fees, but the hospital fees. The disclosure statement does not say if the fees are the billed fees, or the net fees after the insurance/Medicare reductions take place. I assume that they list the net fees, which would be the only meaningful numbers if you are interested in hospital revenues.

The top billing physician was a 52 year old cardiologist. Would you like to hazard a guess how many dollars he brought into the hospital in one year? If you guessed $16.4 million you win the prize. Assuming he does surgery or procedures 5 days a week, 50 weeks per year, this works out to $65 thousand per day. Darned impressive IMO. I am not suggesting this doctor is doing anything wrong or immoral. This illustrates to me why doctors would want to own their own hospital. If I was the cardiologist generating that much revenue, I would certainly consider going into a partnership with other doctors and owning a hospital. The top 10 doctors at this particular hospital brought in $124 million or an average of $12.4 million per doctor. If I am the hospital, I am certainly taking out a business interruption policy for all of the top doctors. If one of the top doctors stops doing procedures, the profitability of the hospital would be severely impacted. (As an aside, I am familiar with a group of doctors that built their own Four Seasons of Hospitals. They have their offices in the same building, so they can do their surgeries without leaving the building)

Just an FYI, but remember the $124 million in annual revenues for the companion REIT post. . .

Thanks,

Yodaorange
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