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BUSINESSDoctors' costs going up faster than revenuesTwo MGMA reports find that physicians' margin of profit is declining.By Tyler Chin, AMNews staff. Nov. 21, 2005. Physicians last year saw their margins -- what's left over after paying expenses -- shrink as costs continued to grow at a faster rate than revenue, according to two new reports released by the Medical Group Management Assn. The MGMA's 2005 Cost Survey Reports for Single-Specialty Practices, based on 2004 data, found that total median revenue after operating costs declined between 1% and 6% per full-time family and internal medicine physician. Margins -- which MGMA refers to as median revenue after operating cost, but what others call net income or profit -- rose a slight 1.3% per full-time pediatrician, according to the report. The margin for obstetrician-gynecologist practices was up 9.7%, but that's not necessarily as good as it looks, said Dan Stech, MGMA's director of survey operations. Cost-shifting from practices to individual physicians can raise the practice's margins while putting physicians themselves in a greater bind. "With these numbers we kind of have to look behind the scenes [because] we heard some practices are having physicians buy professional liability insurance on their own instead of the practice buying it," Stech said. A major reason why primary care physicians are seeing their margins shrink is that operating costs, including staffing, medical and surgical supplies, information technology and rent, are continuing to rise while revenue growth stagnates, Stech said. For example, single-specialty primary care practices saw median total support staff costs per full-time equivalent physician grow 4.6% to $164,649. Median total operating cost per FTE doctor grew 5.7% to $329,395. The cost of liability premiums for single-specialty and multispecialty practices saw double-digit percentage growth again, up between 11% and 19% per FTE doctor in family medicine, internal medicine, ob-gyn and pediatrics. [...]Full text of AMNews content is available to AMA members and paid subscribers.
Copyright 2005 American Medical Association. All rights reserved.
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