Why medical practices spend more on business operations
By - As healthcare continues to evolve, it only makes sense that practices might have to hire more staff. However, if a recent survey is any indication, doctors and nurses are not the only ones being brought on to help organizations thrive.
Medical practices said they spent more money on total business operations staff per full-time-equivalent (FTE) physician since last year, according to Medical Group Management Association (MGMA). This included general administrative staff, information technology staff, general and patient accounting staff, as well as managed care administrative staff.
MGMA’s Cost Survey: 2014 Report Based on 2013 Data showed that practices saw a 4.6 percent increase on business operations spending. Multi-specialty practices reported $52,009 per FTE physician in median costs associated with total business operations staff.
“Medical practice executives are an integral part of the healthcare framework and are playing an increasingly important role in serving patients, as there is an entire business and structure behind effective care-delivery models,” Laura Palmer, FACMPE, MGMA senior industry analyst, said in a statement. “Employing staff with expertise in medical practice management can position the practice for long-term success and sustainability.”
This increase could be due to practices putting more value on employing staff with expertise in the business of care delivery. Additionally, having employees who can strategically align the business and clinical functions of the organization could also be seen as being more important.
The report also showed that practice ownership plays a role in practice size. For example, physician-owned practices have more total support staff per FTE physician than hospital/IDS-owned practices, regardless of practice type.
“The largest variance occurs in nonsurgical single-specialty practices with 1.93 more support staff per FTE physician in physician-owned practices,” the report said. “The lowest variance occurs in surgical single specialty practices with just 1.17 more total support staff per FTE physician in physician-owned practices.”
Moreover, the bulk of total costs came from personnel costs, according to the report. Specifically, total physician, total non-physician provider and total support staff costs represented approximately 87 percent of the all practice costs for multi-specialty practices. In comparison, building, occupancy and medical and surgical supply costs represent just under 7 percent of total costs. Ancillary services costs rounded out the bottom, representing just 1.26 percent of total practice costs.
The payer mix also has little variance across multi-specialty practices, the report found. Commercial payers compose 53.80 percent of charges in physician-owned practices, while government payers make up only 42.91 percent of charges. Additionally, in hospital/IDS-owned multi-specialty practices, commercial payers compose 48.82 percent of charges. However, government payers make up nearly the same with 46.64 percent of charges.
According to MGMA, medical practices could also be facing increasingly complex regulatory changes, which are forcing them to allocate more staff resources. Anders Gilberg, MGMA senior vice president of government affairs is not sure this is a positive change.
“The complex and overlapping requirements of current Medicare PQRS, Meaningful Use, and Value-Based Payment Modifier programs are cases in point, ironically increasing administrative reporting costs for practices instead of supporting their efforts to improve patient care,” Gilberg said.
