Some telling hospital industry metrics have improved over the past few months.
In a pair of mid-summer reports, Standard & Poor’s Ratings Services revealed that fiscal 2009 median ratios for U.S. stand-alone not-for-profit hospitals improved in 2009 – in comparison to significant drops in 2008 – and there have been modest improvements in large health system ratios across the rating spectrum.
These gains have not offset the losses caused by the recession, however, as hospital medians still fall below the peaks reached in 2006 and 2007. Nonetheless, considering the economic conditions over the past two years, you take what you can get.
On the flip side, physician practices have not enjoyed much positive economic reinforcement this year.
A recent survey by the American Medical Group Association, found that most medical specialties saw only modest increases in compensation in 2009, and many provider organizations continue to operate at a significant loss.
The 23rd annual Medical Group Compensation and Financial Survey found that 76 percent of medical specialties experienced increases in compensation in 2009, with the overall average increase around 3.8 percent. AMGA surveyed 49,700 healthcare providers throughout the United States.
The primary care specialties saw about a 3.8 percent increase in 2009 (the same as in 2008), while other medical specialties averaged an increase of 2.4 percent and surgical specialties averaged around 3.8 percent.
During 2009, the specialties experiencing the largest increases in compensation were pulmonary disease (10.37 percent), dermatology (7 percent), and urology (6.36 percent). Nonetheless, Don Fisher AMGA’s president and CEO, says compensation only fluctuates marginally for most specialties.
"The modest increases seen this year reflect the negative impact of declining reimbursements, competition for specialists, the cost of new technology, and other factors on practice revenues in most parts of the country," Fisher said.
Medical groups in most regions did better in 2009 than in 2008, but margins were thin.
Indeed, physician groups in the eastern and western regions of the U.S. were operating at break-even levels in 2009. Organizations in the southern region continued to operate at a loss of $1,034 per physician in 2009, while groups in the northern region reported losses of $9,943 per physician in 2009, compared to a $3,254 loss per physician in 2008.
The study also found that medical groups were buffering their 2009 losses with other non-clinical revenue sources or funding from their health systems.
This sobering information echoes the results of an early summer survey by the Medical Group Management Association. The MGMA asked its members to define their biggest daily challenges, and unsurprisingly, financial concerns topped the list.
The number one concern for practice managers? “Dealing with rising operating costs,” according to the survey. Close behind was “Managing finances with the uncertainty of Medicare reimbursement rates.”
William Jessee, MD, MGMA’s president and CEO, said he wasn’t surprised by the survey’s outcome, given “the continued Congressional irresponsibility in not permanently addressing the flawed sustainable growth rate formula.”
Most of agree that the reimbursement system has to be repaired, especially as it relates to primary care physicians.
Fisher says – accurately, I think – that the current transaction-based reimbursement system is “largely indifferent” to the efforts of medical groups to elevate the standard of care in the United States. He said the inequities of the current payment model have to be addressed in a less piecemeal fashion, and that a new payment model should incorporate a “substantial component” reflecting achievement of quality results.
Reimbursement reform will undoubtedly be tied to quality outcomes, but will we get the reform we need quickly enough to maintain the financial viability of primary care practices?