Physician-owned practices paid more than $32,500 per doctor to meet IT demands, study says

The cost to implement information technology needed to meet federal mandates for value-based care is taking a financial toll on physician-owned multispecialty practices, according to the Medical Group Management Association.

Transitioning to electronic health records, the use of patient portals and hiring additional staff for the technology upgrades has contributed to these practices spending more than $32,500 per full-time physician for IT in 2015, the MGMA said.

IT costs will continue to rise under new federal rules for the Merit-Based Incentive Payment System and Alternative Payment Models to implement the Medicare Access CHIP Reauthorization Act, or MACRA, according to Halee Fischer-Wright, president and CEO of the Medical Group Management Association.

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"We remain concerned that far too much of a practice's IT investment is tied directly to complying with the ever-increasing number of federal requirements, rather than to providing better patient care," Fischer-Wright said. "Unless we see significant changes in the final MIPS/APM rule, practice IT costs will continue to rise without a corresponding improvement in the care delivery process."

The MGMA data shows that staff expenses to make upgrades to IT have risen nearly 47 percent per full-time physician since 2009, suggesting that the larger investments in technology have yet to result in significant administrative efficiencies for practices, the association said.

Total operating costs for physician-owned multispecialty practices increased by nearly 15 percent per full-time physician in 2015, according to the data, outpacing the more than 10 percent increase in total revenue realized last year.

[Also: Enter MACRA: CMS chief Andy Slavitt says new law lets doctors be doctors]

However, being part of an accountable care organization has helped.

Physician-owned multispecialty practices that are part of an ACO saw lower costs and higher total medical revenue after operating costs last year than in 2014, the data shows.

The data also shows physician-owned multispecialty practices are at a financial disadvantage over their hospital-owned counterparts.

These practices reported having a higher total number of full-time support staff on payroll – including personnel who oversee business operations, the front office, and clinical support – than hospital-owned practices.

However, both physician-owned and hospital-owned practices reported a small decline in total support staff over the past two years.

[Also: Here are the MACRA questions every healthcare provider must ask]

Examining the payer mix for multispecialty groups with both primary and specialty care in 2015, Medicare accounted for a nearly identical share of charges – roughly 33 percent – at both physician-owned and hospital-owned practices.

However, hospital-owned practices reported that Medicaid represented 14 percent of charges last year, which is more than twice the nearly 7 percent reported by physician-owned groups.
Overall, since 2009, technology costs for physician-owned multispecialty practices have increased by more than 40 percent.

The largest increase occurred between 2010 and 2011 when practices began implementing the Electronic Health Record. They shouldered more of the burden after 2011, when financial incentives slowed, the data shows.

Also contributing to costs are online patient portals. More than half of the nearly 850 physician practices responding to an MGMA Stat poll have made investments in online patient portals.

The findings come from the 2016 MGMA Cost and Revenue Report, that includes data for healthcare organizations broken down by specialty, ownership, and geographic region.

The Medical Group Management Association represents more than 33,000 medical practice administrators and executives.

Twitter: @SusanJMorse