MGMA: Productivity, costs and revenue affect practice ownership

In the past five years, non-hospital/IDS-owned medical groups reported a 0.09 percent increase in total relative value units (RVUs) per patient and a nearly 13 percent increase in work RVUs per patient, according to the Medical Group Management Association.

The MGMA’s “Cost Survey for Multispecialty Practices: 2010 Report Based on 2009 Data” indicates that multispecialty groups that were hospital/IDS-owned reported a slight decrease in total RVUs per patient (0.55 percent) and a 17.85 percent decrease in work RVUs per patient.

Other findings include:

For non-hospital/IDS-owned medical groups:

• Operating costs per full-time-equivalent (FTE) physician increased by nearly 2 percent since last year;
• Total medical revenue after operating cost per FTE physician decreased slightly (0.16 percent) since last year;
• Staff and provider costs in 2009 (including support staff, non-physician providers and physicians) comprised 76.06 percent of total costs; and
• The number of patients per provider has decreased nearly 9 percent in the past five years.

For hospital/IDS-owned medical groups:

• Operating costs per FTE physicians decreased by 0.37 percent from 2008 to 2009;
• After operating costs, total medical revenue per FTE physician increased by 2.4 percent for the same time period;

• Staff and provider costs in 2009 (including support staff, non-physician providers and physicians) made up nearly 89 percent of total costs; and
• Groups reported about a 9 percent increase in patients seen per provider in the past five years.

“Practice ownership typically impacts a practice's income statement,” said Kenneth T. Hertz, a principal with the MGMA's Health Care Consulting Group. “In the private practice model, EHR incentives have provided a catalyst for practices to purchase systems and deploy electronic health records, therefore increasing the practice's information technology expenditures. These increases will be reflected in the balance sheet as well as the practice’s income statement.”

“In the hospital/IDS-owned model, tight budget controls have coupled with the deployment of electronic health records and may account for reductions in administrative supplies and transcription costs,” he said.

Between 1999 and 2009, median total operating cost as a percentage of total medical revenue increased by 3.2 percentage points for non-hospital/IDS-owned practices. At the same time, hospital/IDS-owned practices' median total operating cost decreased by nearly 1 percent.

The report also revealed trends specific to specialty practices. Family practice, anesthesia and orthopedic surgery reported increases in total medical revenue after operating costs. Cardiology, pediatrics, gastroenterology and urology reported decreases in total medical revenue after operating costs.

This year's reports contain data on more than 45,000 providers, and group participation increased by 8 percent over last year.