Cost of Medical Care in a Practice of Internal Medicine

Ambulatory and hospital charges generated in 1972 by a group of seven internists rendering comprehensive primary care to more than 17 000 patients are presented. Gross billings for ambulatory services in 1972 totaled $889 801. Charges for 970 patients admitted to the hospital were $771 204. Services by extended-care facilities increased the cost by $40 378. The mean total health care cost generated by each physician was $243 054. The cost generated by each physician-patient encounter averaged $40 and varied among the physicians from $34 to $43. Gross annual per-capita cost of hospital and office care for their patients varied among the physicians from $69 to $137—a difference of almost 100%. The problems that might be encountered by such a group in changing from a fee-for-service to a prepayment reimbursement plan are considered.