Survey: Total medical group investment per physician improved in 2018

July 18, 2019

Data from the newly released AMGA 2019 Medical Group Operations and Finance Survey shows that integrated system and independent practice operating margins improved from 2017 to 2018, reports AMGA. The findings indicate that healthcare organizations are developing strategies to better manage their physician enterprises.

"Healthcare organizations have seen continued pressure on margins with costs continuing to escalate and volume relatively stable or even in decline,” Fred Horton, MHA., AMGA Consulting President told Healthcare Purchasing News. “When you couple the margin erosion with the number of medical-group
acquisitions the urgency has increased. The physician practice component is receiving more focus and scrutiny as organizations work to produce financial results in this challenging environment."

Data from this year’s survey, conducted by AMGA Consulting, shows median total investment (loss) per physician in integrated systems changed from $243,918 in 2017 to $201,042 in 2018, a 21 percent improvement. In independent practices, which are set up to break even, the total profit per physician improved marginally from $2,396 in 2017 to $2,510 in 2018.

To better understand how operational and financial factors at each level affect bottom line outcomes, AMGA says the 2019 edition of the survey was redesigned to analyze performance at the department, process, role, and line item levels. The survey now includes data benchmarks in the following areas:

· Revenue cycle metrics, including best practice utilization, denials, claims lag times, and central business office staffing

· Access information, including provider scheduling data, panel size, and access metrics

· Clinic staffing details, with role-specific levels per physician, per provider, and per 10,000 wRVUs

· Advanced Practice Provider to Physician ratios by specialty

· Benchmarks for both independent practices and integrated systems

“Due to accounting processes, physician enterprises have historically produced a loss or investment per physician,” Horton added, “Given the growth in numbers of physicians in most organizations, the resulting roll-up financial position tends to produce a large negative number. Even though a portion of the total investment per physician is due to accounting and assignment of ancillary services, given the sheer magnitude of the numbers, organizations want to ensure they are operating their practices at an optimal level. While management of practice operations has always been important, more attention has been paid to acquisitions and building physician enterprises, especially in the past five years. Organizations are now seeing the result of the changes in the physician enterprise and the need is there to understand the impact at a more detailed, operational level.”

New strategies

The survey also now includes data on the prevalence of certain operational best practices. For example, readers will find that almost all respondents now employ multiple access strategies to increase convenience for patients. These strategies include offering early or after-hours visits (71 percent of respondents) and providing telehealth services (36 percent).

“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,” said Rose Wagner, RN, MHS, AMGA Consulting Chief Operating Officer, in the statement. “Bottom lines can be impacted by numerous factors, such as allocation methodology, ancillary assignment, etc., many of which are outside the control of medical group operations, thus making them non-actionable. Regardless of integrated or independent model of ownership, you must focus on process orientation and individual line-item variances. Once those are understood, the hard work of improvement can begin.”

When asked to expound on those findings, Horton told HPN, “What we have found historically is that organizations have focused on the total investment per physician for their enterprise. While the aggregate number does provide a benchmark, it does not provide enough line item detail to be helpful in identifying opportunities for improvement.  The process orientation we see as successful is when organizations apply the more finite line item key drivers of success and integrate them in an approach to manage variation from metrics.

“For example, our survey provides not only the costs of clinic support staffing but also a breakdown of the component parts, such as RN, LPN, and medical assistant staffing,” he continued. “When these are integrated into a volume adjusted staffing ratio, they can provide key insight and an actionable opportunity for improvement. Further, ratios can be adjusted to include other roles, like population health and behavioral health resources, which become more common in the shift from volume to value.  It is our perception that these types of changes are unique to each organization and their market and that each organization should assess where they are at in the transition to value. Organizations with more revenue at risk may move quicker to different models of care to find the right alignment of resources for their mix of providers, services and market.”

HPN also inquired about the resources, or technologies, that organizations are tapping most right now in order to meaningful changes. Elizabeth Siemsen, AMGA Consulting Director, provided some insight. “Systems continue to invest in the electronic medical record. For many groups, the EMR has not been the answer to improving efficiency that was once hoped for, but the potential is still there,” Siemsen said. “The most successful groups have leveraged the EMR as an integral part of the transition to value, with participation of the end-user to optimize the impact for providers. The power of the EMR can only be fully accessed through engaging the people that use it. Organizations that don’t invest in the time and resources to optimize the EMR, will have a more difficult time seeing the benefits and the tool can become more of a burden than an asset. 

“Organizations also continue to invest in scribes to support physician productivity and efficiency,” she continued. “In addition, many organizations are also investing in telehealth programs as both a patient convenience and provider access tactic. Healthcare is largely local market based, in particular in overall approach to taking risk. Our survey gives the tools for an organization to adjust the detail and set their goals based on where they are in the journey.”

Response data came from not-for-profit and for-profit medical groups across the U.S., representing more than 15,300 provider FTEs. Responses were balanced between integrated systems and independent practices, with 54 percent of responses coming from integrated systems and 46 percent coming from independent practices.