Indirect institutional revenue generated from an academic primary care clinical network

Background and Objectives: As the financial performances of US academic health centers have faltered under managed care and the Balanced Budget Act of 1997, increasing attention has been paid to the costs and benefits of operating primary care networks. This study examines the indirect revenues to a university hospital and faculty group practice that result from such a primary care network using a method of abstracting billing data. Methods: A primary care patient cohort was identified by selecting all patients who generated at least one charge in any of the 10 primary care clinics in the network over a 15-month period. All charges from the hospital and the faculty practice group for this cohort were then examined during a 6-month period, and the total charges generated in the primary care setting were compared with charges generated elsewhere in the health system. Results: The primary care patient cohort included 56,459 patients and generated a total of $7,243,312 in charges for primary care services, $43,559,741 of charges in the hospital billing system for non-primary care services, and $8,825,611 of charges for services from specialty faculty. This cohort accounted for 18.5% of the gross charges for hospital care and 17.6% of charges generated by the specialty physicians. Conclusions: Using a simple and replicable methodology, this study estimates a substantial financial benefit to the hospital and specialty practices from a primary care network.