Operating costs at many medical group practices rose faster than revenues in 2007, according to a new survey by the Medical Group Management Association.
The MGMA released the results of its "Cost Survey: 2008 Reports Based on 2007 Data" at the organization's 2008 Annual Conference this week in San Diego. MGMA data indicate that over the past decade, operating expenses at group practices have risen from 58 cents to 61 cents per dollar of revenue.
Multispecialty group practices reported a 5.5 percent increase in median total revenues, while median operating costs increased by 6.5 percent. Many single-specialty practices reported a similar trend.
For example, the survey revealed that cardiology practices' median total medical revenues decreased 0.61 percent while operating costs rose 6.3 percent. Family practice, OB/GYN, pediatrics and orthopedic surgery groups reported similar conditions.
"Group practice leaders nationwide have been wringing their hands for more than a decade over the seemingly endless trajectory of costs consuming a larger portion of practice revenues," said William F. Jessee, MD, president and CEO of the MGMA.
Jessee said that while each medical specialty's cost drivers are unique, some overall trends can be observed:
(bullet) Drug supply - In multispecialty groups, drug supply costs jumped 17 percent in 2007, compounding a 33 percent increase from the previous year. Drug supply costs increased dramatically for pediatric practices - 56 percent in 2007 - creating a 132 percent increase in the past three years. MGMA data indicate drug expenses drove costs among primary care specialties, in general.
(bullet) Support staff - Family practices, which derive most expenses from employees, reported a 15.8 percent increase in 2007. OB/GYN and pediatrics groups reported similar hikes in support staff costs - 17.2 percent and 10.1 percent, respectively.
(bullet) Professional liability - OB/GYN groups reported a 3 percent decrease in these costs, compounding a decline in 2006. Orthopedic surgery also posted a reduction of 7.4 percent. The survey results indicate this trend was not consistent among all specialties, however. For example, cardiology groups reported an 8 percent increase in malpractice insurance premiums in 2007, contributing to the 132.3 percent increase they've experienced since 2000.
"With no end in sight to declines in reimbursement, rising inflation and the expanding morass of red tape practices must contend with just to do business, we believe that without intervention, practices won't be able to cope," Jessee said.
The 2008 Cost Survey Reports represent data submitted by practices that provided information on nearly 30,000 providers - which MGMA claims is the largest provider population of any cost survey report in the United States.
The single-specialty report includes new data for radiology practices. The multispecialty report and single-specialty reports include new data on total medical revenues by type of payer.