Greater Non-Physician Staffing Helps Healthcare Revenue Cycle

July 21, 2017 - Increasing the number of non-physician providers and support staff, such as physician assistants and nurse practitioners, is key to healthcare revenue cycle performance, a recent MGMA survey revealed.

The survey of over 2,900 medical groups across 40 specialties uncovered that practice operating expenses grew at almost the same rate as healthcare revenue between 2015 and 2016. However, practices that ended 2016 with greater revenue used higher ratios of non-physician provider and support staff to physicians.

Practices that used a healthcare staffing ratio of 0.41 or more non-physician providers full-time equivalent (FTE) per FTE physician earned greater healthcare revenue after operating costs than practices that employed a ratio of 0.20 or fewer non-physician provider per FTE physician.

In addition, the survey showed that practices that employed more non-physician providers and support staff also experienced higher levels of productivity. Practices with higher staffing ratios reported at least a 34 percent boost in productivity compared to their peers.

“Our annual Cost Survey continues to show the importance of NPPs [non-physician providers] and support staff in physician practices and hospitals, as well as other factors that impact practices’ bottom line,” stated Halee Fischer-Wright, MD, MMM, FAAP, CMPE, MGMA President and CEO. “Contrary to what some may believe, with increased staffing come much larger gains in revenue after operating cost, as well as productivity.”

Physician-owned practices tended to employ additional non-physician providers and support staff compared to hospital-owned organizations. The practices had between one to three more support staff per FTE physician than their hospital-owned peers.

MGMA noted that hospital-owned practices may not need to hire additional support staff to manage healthcare revenue cycle management functions.

“Hospital-owned practices have more opportunity to consolidate business office functions and centralize services for multiple practices, therefore requiring fewer overall support staff on-site than physician-owned practices,” the industry group explained.

Additionally, MGMA found three other factors that impacted healthcare revenue cycle and costs among medical groups between 2016 and 2016.

First, payer mix affected medical group costs. Primary care practices with lower proportions of government payer mix faced higher operating costs as well as higher healthcare revenue after operating costs per FTE physician.

Among physician-owned medical groups, those with a government payer mix of 30 percent or less, generated $159,307 more in healthcare revenue per physician versus practices with a government payer mix of 50 percent or more.

Similarly, hospital-owned practices with a lower government payer mix yielded $221,497 more in healthcare revenue per physician than their peers with a greater government payer mix.

Second, rising prescription drug rates significantly boosted medical group operating costs from 2015 to 2016.

Drug supply spending grew by over 10 percent per FTE physician by 2016, with multispecialty practices facing the greatest increase in spending at 16.5 percent.

Multispecialty practices have reported a significant boost in drug spending over the last five years, researchers pointed out. Prescription drug costs increased by 53 percent or more per FTE physician.

However, primary care practices experienced the greatest increase in drug spending over the last five years. The practices reported an 87 percent growth per FTE physician.

Between 2015 and 2016, primary care and non-surgical specialty practices each experienced an 11 percent growth in prescription drug costs.

Third, medical groups stated that health IT expenses were slowly and steadily rising. Physician-owned practices reported spending between $2,000 and $4,000 more per FTE physician on health IT operating expenses in 2016 compared to the previous year.

As a result, practices spent as much as $19,000 on health IT operating costs per physician each year. On the lower end, practices doled out $14,000 per FTE physician each year.

Health IT operating costs included the purchasing expense, EHR system and patient portal maintenance, and contracted expenses for practice hardware repairs and software needs.

MGMA noted that health IT operating costs dipped for hospital-owned practices compared to their physician-owned peers. For example, hospital-owned primary care specialties actually decreased health IT operating costs per FTE physician by $116 between 2015 and 2016, whereas physician-owned practices reported a $2,898 increase.