Physician practices see increased operating losses, survey shows
Like hospitals, physician practices face growing cost pressures and decreased operating results, AMGA reports.
Per physician operating loss grew from 10% of net revenue in 2016 to 17.5% last year, according to the 2017 Medical Group Operations and Finance Survey. Total losses per physician climbed from a median of $95,138 in 2016 to $140,856 in 2017.
During the two-year period, median net professional revenue dropped from $682,735 to $681,322, despite a median increase $111,275 in gross professional revenue — from about $1.2 million to about $1.3 million.
While private practices reported a per physician operating margin of $16,378, integrated health systems saw per physician operating losses of $31,957 from 2016 to 2017. Practice size also had an impact with small and mid-size groups reporting increased operating losses per physician, while larger groups saw operating loss decline.
“The results of this survey suggest that groups must be diligent in managing their operational imperatives of their organizations,” Fred Horton, president of AMGA Consulting, said in a statement. “Without real focus on operational costs and processes, there is a significant inability to grow revenues in a manner that will outpace practice inflation.”
The findings dovetail with the financial struggles hospitals are experiencing in today’s healthcare cost environment. Both nonprofit and for-profit hospitals are seeing revenue decline and losses mount as new reimbursement models emphasize shorter stays and more care delivered in outpatient settings.
In addition to finances, smaller physician groups also worry about the burden of MACRA reporting. Small and rural providers have repeatedly said their lack of capital and resources make complying with the reporting requirements a serious strain on financials.
In an effort to accommodate smaller provider concerns, CMS raised the low-volume threshold for MIPS participation from $30,000 in Medicare Part B charges or 100 Medicare patients to $90,000 or 200 patients. The change, finalized in the fall, is expected to exclude about 134,000 clinicians from MIPS, adding to 800,000 already exempted from the program.
Still, despite the potential hardship on providers, AMGA has opposed CMS’ increasing flexibility around MACRA/MIPS. In comments on the Quality Payment Program proposed rule implementing MACRA, AMGA said loosening requirements needlessly delays the shift to value-based care and “fails to recognize the significant investments made in preparation for participation” in MACRA.