Physician-owned practices keeping costs in check, MGMA reports

Based on 2011 data analyzed by the Medical Group Management Association (MGMA), total operating costs per full-time equivalent (FTE) physician rose a modest 1.27 percent since 2010. Hospital/IDS-owned multispecialty medical practices saw more of a cost jump over the same measurement period, MGMA reported, an increase of 6.45 percent.

Released by MGMA on Dec. 12, the cost survey, collected data from more than 46,800 providers and 2,100 groups. Overall, physician-owned multispecialty practices reported $528,182 in total operating costs per FTE physician. Hospital/IDS-owned multispecialty medical practices reported $387,586 in total operating costs per FTE physician.

“It’s commendable that medical practices are so diligently monitoring their costs,” explained Susan Turney, MD, president and CEO of MGMA-ACMPE, in a prepared statement. “It is almost impossible, however to make informed business decisions and craft long term strategies when a disastrous cut to Medicare physician payments looms on the horizon. When costs continue to increase and practice professionals are forced to conservatively plan for their future, it hinders their ability to innovate and rapidly evolve as our industry calls for transformation.”

Physician-owned medical practices reported $13,077 in median costs for medical and surgical supplies, a decrease of more than 5 percent since 2011. Conversely, practices reported $39,143 in drug costs per physician, which marks an increase from last year. Medical practice professionals also reported increased costs in building and occupancy charges. In 2011, medical practices reported spending slightly less on promotions and marketing. But since 2007, those costs increased by 6 percent to a median of $3,601 per FTE physician.

“It isn’t necessarily surprising that physician practices are investing more time and resources into promotion and marketing over the years,” said Kenneth T. Hertz, principal at the MGMA Health Care Consulting Group in a statement accompanying the survey results. “If you’re working to attract new patients or expand to new areas, it may be money well spent to promote your physicians, services and facilities, especially in such a competitive marketplace.”