Profitability also impacted by payer mix, as well as rising information technology and drug costs
Englewood, Colo. – July 19, 2017 — Medical Group Management Association (MGMA) released its 2017 MGMA DataDive Cost and Revenue Survey today which revealed that one of the key factors of medical group profitability and productivity resides in the utilization of non-physician providers and key support staff.
Between 2015 and 2016, practice operating expenses increased at nearly the same rate as revenue. The practices that came out with increased revenues owe it namely to increased non-physician providers and support staff. The practices with a higher non-physician provider (NPP) to physician ratio (0.41 or more NPPs per full-time equivalent [FTE] physician) earn more in revenue after operating cost than practices with fewer NPPs (0.20 or fewer NPPs per FTE physician) regardless of specialty.
"Our annual Cost Survey continues to show the importance of NPPs and support staff in physician practices and hospitals, as well as other factors that impact practices’ bottom line" said Dr. Halee Fischer-Wright, MD, MMM, FAAP, CMPE, President and Chief Executive Officer at MGMA. "Contrary to what some may believe, with increased staffing come much larger gains in revenue after operating cost, as well as productivity."
Practices with more support staff per FTE physician not only report having higher levels of revenue, but also have increased productivity. Across all specialties, the difference is one to three more support staff per FTE physician in physician-owned practices than in hospital-owned. Hospital-owned practices have more opportunity to consolidate business office functions and centralize services for multiple practices, therefore requiring fewer overall support staff on-site than physician-owned practices.
Based on comparative data of more than 2,900 organizations and 40 specialties and practice types, MGMA’s Cost and Revenue Survey is the most comprehensive survey of its kind in the United States (U.S.).
OTHER HIGHLIGHTS AFFECTING COSTS FOR GROUPS THAT RESULTED FROM THE SURVEY INCLUDE:
- PAYER MIX: Primary care practices with a lower percent of government payer mix report having higher operating costs and even higher revenue after operating cost per FTE physician in both physician-owned and hospital-owned practices. Within the physician-owned primary care groups, those with a mix of 30 percent or less, yield $159,307 more in revenue per physician than those with a mix of 50 percent or more. In hospital-owned practices that difference is $221,497.
- DRUG COSTS: Drug supply costs continue to rise. From 2015 to 2016, drug supply expenses increased by more than 10 percent per FTE physician: 11 percent for nonsurgical specialty, just over 11 percent for primary care and more than 16.5 percent for multispecialty practices. The largest increases in drug supply costs over the last five years have been reported for multispecialty practices at an increase of 53 percent more per FTE physician and 87 percent more per FTE physician in primary care practices.
- IT EXPENSES: IT expenses are also on a slow and steady rise for most practices. Within the last year, physician-owned practices spent anywhere between nearly $2,000 to $4,000 more per FTE physician on IT operating expenses than they did the prior year, resulting in an expense of approximately $14,000-19,000 in IT operating expenses per physician each year, dependent upon specialty. The increase is less for hospital-owned practices. These expenses include the cost of purchased IT services such as the maintenance of EHRs and patient portals, as well as any contracted expenses for the repair of practice hardware and software needs.
MGMA’s Cost and Revenue Survey is the most trusted cost and revenue survey in the U.S., undergoing a rigorous evaluation and inspection.