Family practice medical groups, unable to fully absorb a 6.3% increase in operating costs and continued declines in reimbursement, reported a decline in margins (total medical revenue after operating cost) of 3.5% overall in 2005, according to the Medical Group Management Association’s Cost Survey: 2006 Reports Based on 2005 Data. The single-specialty report found that the financial health of group practices varied considerably by medical specialty, however. For example, ob/gyn practices reported a decline in margins of 2%, while anesthesiology groups experienced a 3.9% increase in margins.
For multispecialty groups, several cost categories seem to be responsible for a 7.6% overall increase in general operating cost per FTE physician. Building and occupancy cost per FTE physician rose 11.2% in 2005 to $40,878, and medical/surgical supply costs rose 11.1% to $9,355 per FTE physician. IT costs increased 10.9% in 2005 to $10,093 per FTE physician, suggesting that groups are purchasing new IT systems in hopes of realizing future benefits. Support staff costs for these groups inched up to 8.6% overall. Even with these increases in operating cost, multispecialty groups boosted margins by 7.3% to $253,230 per FTE physician in 2005. This increase can be attributed to a rise in overall production by 5.9% (measured by total procedures per FTE physician). Read the press release.
