Medical practice groups saw better margins in 2018

By | July 19, 2019

Dive Brief:

  • Total profit per physician in independent practice associations rose to $ 2,510 per doctor last year, up from $ 2,396 in 2017. That’s a 4.7% increase, according to AMGA Consulting’s annual physician group survey.
  • Median total investment, or loss, in physicians in large integrated practices fared even better, dropping 21% to $ 201,042 last year from $ 243,918 in 2017.
  • The survey attributed the improved financial performance of both practice types to overall better business management.

Dive Insight:

Medical group surveys are often tales of woe, with reports of practices under consistent financial pressure due to tightening reimbursement, regulatory and political uncertainty and other industry headwinds.

At the same time, physician practices are increasingly owned by hospitals. The number of hospital-acquired physician practices grew from 35,700 in 2012 to more than 80,000 in early 2018, according to a report by Avalere Health and the Physicians Advisory Institute.

In 2018, it appears the surveyed medical groups responded more like businesses than just providers. The survey included more than 15,300 full-time provider employees, with 54% coming from integrated systems and 46% from independent practices.

The new survey by AMGA Consulting conducted on behalf of the AMGA trade group suggests medical practices are treating their patients more as consumers and benefiting as a result. Of the practices surveyed, 71% say they now offer early or after-hour visits with their providers, and 36% offer telemedicine services.

“Across healthcare, integrated systems are feeling financially challenged, and as a result, are focusing on better management of their physician enterprises,” AMGA Consulting President Fred Horton said in a statement.

The 2019 AMGA survey has also been expanded to include more business-specific metrics, such as performance analysis at the department, process, role, and line-item levels.

However, the group cautioned its membership not to focus solely on dollars and cents.

“Although investment (loss) or profit per physician is viewed as an industry standard metric, relying solely on bottom line financial results to assess performance can lead to missed opportunities for improvement,” Rose Wagner, AMGA Consulting’s chief operating officer, said in a statement. “Bottom lines can be impacted by numerous factors, such as allocation methodology and ancillary assignment, many of which are outside the control of medical group operations.”

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