A study of California hospitals finds growing use of supplemental payments meant to ensure adequate physician staffing in specialty areas
California hospital spending on supplemental payments to contracted medical groups has steadily grown in key specialties over the past two decades, according to a new Health Affairs study led by Erin Duffy, a scholar at the USC Schaeffer Center and research assistant professor at the USC Price School of Public Policy.
Why it matters: Hospitals across the country use these stipends to help bolster staffing. Despite concern over hospitals’ growing labor costs, stipends have received little attention, possibly because there is limited data on their use. By leveraging California’s unique hospital financial reporting requirements, researchers were able to track this spending within the state over time.
How it works: Clinicians at medical groups contracted by a hospital typically bill health plans and payments for care they provide. In some cases, hospitals also agree to provide these medical groups with additional payments, or stipends.
The study’s key findings:
- The share of California hospitals with stipends for emergency medicine increased from 70 percent in 2002 to 81 percent in 2021. Among these hospitals, average annual stipend payments for emergency medicine grew from $715,000 to $4.1 million.
- The share of California hospitals with stipends for anesthesiology increased from 36 percent in 2002 to 57 percent. Among these hospitals, average annual stipend payments for anesthesiology grew from $648,000 to $2.9 million.
- A sizable increase in anesthesiology stipends after California banned the specialty from surprise billing suggests that the payments may have helped supplement lost patient revenue. It’s possible the federal surprise billing law could have a similar impact on stipend spending nationally.
- Hospitals with a greater share of revenue from public payers like Medicare and Medicaid, which reimburse at lower rates than private insurers, were more likely to pay stipends. Reduced funding in public programs could put more financial pressure on hospitals to ensure adequate staffing.
About the Study
Other authors are Sarah Green and Erin Trish of the USC Schaeffer Center for Health Policy & Economics. See the study for author dislocusre information.
