An analysis of revenues and expenses in a hospital-based ambulatory pediatric practice

J. E. Berkelhamer and K. J. Rojek
Department of Pediatrics, University of Chicago Pritzker School of Medicine, Ill.

We developed a method of analyzing revenues and expenses in a hospital-based ambulatory pediatric practice. Results of an analysis of the Children's Medical Group (CMG) at the University of Chicago Medical Center demonstrate how changes in collection rates, practice expenses, and hospital underwriting contribute to the financial outcome of the practice. In this analysis, certain programmatic goals of the CMG are achieved at a level of just under 12,000 patient visits per year. At this activity level, pediatric residency program needs are met and income to the CMG physicians is maximized. An ethical problem from the physician's perspective is created by seeking profit maximization. To accomplish this end, the CMG physicians would have to restrict their personal services to only the better-paying patients. This study serves to underscore the importance of hospital-based physicians and hospital administrators structuring fiscal incentives for physicians that mutually meet the institutional goals for the hospital and its physicians.