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Practice IT Costs Continue to Soar; Few Savings Generated

October 13th, 2016

ENGLEWOOD, CO – Over a six-year period, information technology (IT) costs increased by more than 40% per physician in the United States.

That’s according to a new survey from the Medical Group Management Association, which finds that physician group practices and other healthcare organizations across the country faced significant increases in IT expenses, while anticipated administrative efficiencies have generally failed to be realized.

The survey — MGMA 2016 Cost and Revenue: 2016 Report Based on 2015 Data — finds that physician-owned multispecialty practices spent more than $32,500 per full-time physician on IT equipment, staff, maintenance, and other related expenses in 2015.

“While technology plays a crucial role in helping healthcare organizations evolve to provide higher-quality, value-based care, this transition is becoming increasingly expensive,” pointed out Halee Fischer-Wright, MD, MGMA’s president and CEO. “We remain concerned that far too much of a practice’s IT investment is tied directly to complying with the ever-increasing number of federal requirements, rather than to providing better patient care. Unless we see significant changes in the final MIPS/APM rule, practice IT costs will continue to rise without a corresponding improvement in the care delivery process.”

Overall, the largest increase in technology costs occurred between 2010 and 2011, apparently related to implementation of the 2009 Health Information Technology for Economic and Clinical Health (HITECH) Act, which incentivized physicians and others to use certified electronic health records, according to the survey. While the HITECH incentives led to a significant increase in the number of organizations adopting information technology systems, those incentives began to decrease significantly after 2011, forcing practices to bear a larger percentage of the cost to upgrade and maintain the technology.

Because of growing adoption and complexity of healthcare IT, physician-owned multispecialty practices have seen steady year-over-year increases in IT staff expenses — soaring by nearly 47% per full-time physician since 2009.

The report notes that the increase in staff costs suggests that larger investments in technology have yet to result in significant administrative efficiencies for practices. At the same time, physician-owned multispecialty practices reported that total operating costs increased by nearly 15% per full-time physician in 2015 for physician-owned multispecialty practices, according to the new MGMA data, outpacing the more than 10% increase in total revenue last year.

In 2015, physician-owned specialties reported having a higher total number of full-time support staff on payroll than those owned by hospital systems. Primary care specialties in both models reported a small decline in total support staff throughout the past two years, while nonsurgical and surgical specialties reported support staff increases over that period.