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Extra Support Staff Shores Up Physician Practice Bottom Lines

Physician practices with a higher non-physician provider (NPP) to physician ratio are more financially successful than those with fewer NPPs. Specialty doesn’t seem to matter, according to the 2017 MGMA DataDive Cost and Revenue Survey.

Specifically, the Medical Group Management Association (MGMA) survey found that practices with 0.41 or more NPPs per full-time equivalent (FTE) physician earn more revenue after operating costs than those practices with 0.20 or fewer NPPs per FTE physician between 2015 and 2016.

"Our annual cost survey continues to show the importance of NPPs and support staff in physician practices and hospitals, as well as other factors that impact practices’ bottom line" explained Halee Fischer-Wright, MD, president and CEO of MGMA. "Contrary to what some may believe, with increased staffing come much larger gains in revenue after operating costs, as well as productivity."

Productivity also was higher at practices with more support staff per FTE physician. The report authors noted that across all specialties, the difference is one to three more support staff per FTE physician in physician-owned practices than in hospital-owned. The authors explained that because hospital-owned practices have more opportunity to consolidate business office functions and centralize services for multiple practices, they generally require fewer overall support staff on-site than physician-owned practices.

The survey is based on comparative data of more than 2,900 organizations and 40 specialties and practice types.

In other findings, the report detailed how IT expenses are rising incrementally for most practices, so that within the last year physician-owned practices spent between nearly $2,000 to $4,000 more per FTE physician on IT operating expenses than the prior year. That resulted in an expense of approximately $14,000-19,000 in IT operating expenses, including the cost of purchased IT services such as the maintenance of electronic health records and patient portals, as well as any contracted expenses for the repair of practice hardware and software needs, per physician each year, depending on specialty. However, the report authors noted that the increase is less for hospital-owned practices.

The survey also found that treating a higher percentage of privately insured patients helps the bottom line. Primary care practices with a lower percent of government payer mix report higher operating costs and even higher revenue after operating cost per FTE physician in both physician-owned and hospital-owned practices. More specifically, with physician-owned primary care groups, those with a mix of 30% or less yield $159,307 more in revenue per physician than those with a mix of 50% or more. By comparison, hospital-owned practices report a difference of $221,497.

Finally, the survey noted rising drug supply costs, which increased more than 10% per FTE physicians from 2015 to 2016.

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