business
Expansion stanches losses at large practices
■ The groups report a 40% decrease in money lost per physician.
Large practices are adding more physicians and becoming part of integrated systems as a means of reducing losses, analysts say.
These entities lost $1,235 per physician in 2011 but $2,023 in 2010, according to the 2012 Medical Group Compensation and Financial Survey issued Aug. 2 by the American Medical Group Assn. and Sullivan, Cotter and Associates. The survey included hospital-owned and independent practices.
Those involved do not believe this is because of increased reimbursement.
“The current Medicare system for the reimbursement and financing of health care is unsustainable,” said Donald W. Fisher, PhD, AMGA’s president and CEO. “AMGA continues to advocate for changes in the Medicare reimbursement system, including a shift from volume-based to value-based payment models.”
Rather, researchers believe the amount of losses may be going down because medical groups are growing in size, which can make a dent in administrative expenses. The 2012 report, which rounds up survey data from 2011, included 225 medical organizations with a total of 55,800 physicians, meaning an average group had 248 doctors. The 2011 report on 2010 data involved 239 medical groups with 51,700 physicians for an average practice size of 216.
“The groups, through merger and acquisition, are becoming larger and taking more market share,” said Brad Vaudrey, a principal with Sullivan, Cotter.
Large groups are more likely to be part of integrated systems. This means losses at practices are made up by other revenue sources that may not be credited to their balance sheets.
“The survey is not of the whole system,” said Tom Flatt, AMGA’s director of communications and publications. “It’s just of the medical group. Losses in the medical group are balanced out by other kinds of revenues in other parts of the system.”
Forty percent of practices were owned by physicians in the 2010 survey, but this decreased to 38% in 2011. The proportion owned by a hospital or health system grew from 51% in 2010 to 53% in 2011. The remainder were owned by foundations, managed care organizations or medical schools.
