Practices Favor Informal Integration
New Medical Group Management Association research finds medical practices favor informal integration with other healthcare organizations over formal mergers.
More than 40 percent of medical practice executives responding to the MGMA survey, Medical Practice Today: What Members Have to Say, indicated that they have or are planning to informally integrate their practice with other healthcare organizations. This includes clinical integration with a hospital or health system, as well as forming or joining an accountable care organization (ACO), physician/hospital organization (PHO) or independent practice association (IPA). Conversely, 27 percent of respondents indicated that they have or plan to formally integrate by merging with another physician-owned practice or by selling practice ownership to a hospital or health system.
“It’s not surprising that medical practices are exploring ways to accommodate patients and combat mounting administrative pressures and are looking beyond the walls of their organization to do so,” said Susan L. Turney, MD, MS, FACP, FACMPE, president and CEO of MGMA. “Physician practices are seeking ways to work better with other care providers, and affiliating informally or clinically integrating with other organizations allows practices to adapt as needed and position themselves for success in a value-based environment.”
The survey, conducted in January and released on June 30, also outlined the biggest professional challenges in running a practice, including the struggle to adapt to rapid changes, legislative pressures and fiscal uncertainty. Details of the survey were published in the July 2014 issue of MGMA Connection magazine. For more information, go online to mgma.com and click on “Recent Articles” under the “Practice Resources” tab.
Increased Competition to Recruit in Private Practices
By no means are all physicians seeking hospital employment, but consolidation coupled with a provider shortage has increased the competitiveness for practices to recruit and retain physicians.
According to the Medical Group Management Association, this competitive environment has increased first-year median guaranteed compensation for providers. Primary care physicians reported $186,475 in median first-year guaranteed compensation when placed in a new practice, and specialists reported $260,000 when placed in a new practice, according to the MGMA Physician Placement Starting Salary Survey: 2014 Report Based on 2013 Data.
In addition to offering competitive compensation packages, some practices have enhanced their benefit offerings to recruit physicians — 60 percent of physicians placed in a new practice reported receiving signing bonuses, and 72 percent accepted paid relocation packages as part of their employment offers.
“Medical practices are offering a number of benefits to recruit physicians,” said Laura Palmer, FACMPE, MGMA senior industry analyst. “With the initial uncertainty surrounding how ACA insurance exchanges would impact healthcare organizations, medical practices were very savvy in planning ahead and anticipating how potential changes to their population may affect their ability to accommodate patients.”
The most recent MGMA Physician Placement Starting Salary Survey contains data on 5,318 providers in 567 medical organizations. For more information, go to mgma.com.
NSCHB Releases Annual Medical and Dental Statistics on Income and Expenses
In late June, the National Society of Certified Healthcare Business Consultants (NSCHBC) released the “2013 Joint Statistics Report of Medical and Dental Statistics on Income and Expenses.” Each year the NSCHBC and the Academy of Dental CPAs compiles statistics report on key cost and revenue components of medical/dental practices utilizing actual data from financial statements and income tax returns of its members. The report includes information on overhead percentages, average monthly charges in accounts receivables, full time equivalent staff ratios, and more.
“The cost and expense of running a business is a major concern of physicians in independent private practices today,” said NSCHBC President Reed Tinsley. “Many physicians and practice managers don't know the cost of keeping their doors open to serve patients, much less know what those costs should appropriately be. Finance and business management is not something typically taught in medical schools.”
The report features data from more than 2,492 professional practices representing more than 5,252 full time equivalent (FTE) doctors. It covers 60 dental and medical specialties including family practice, general dentistry, internal medicine, obstetrics and gynecology, and orthodontics.
Key findings of the report include:
Net income for all primary care practices increased in the last five years (2009-2013), but family practice without OB increased the most at 144 percent.
Cardiology, OB/GYN and plastic surgery net income decreased over the same period by 46 percent, 2 percent and 12 percent, respectively.
OB/GYN and plastic surgery practice incomes were on a track to greater loss from 2009 to 2011 but have experienced an upswing in the last two years.
During the same five-year period, general dentistry and orthodontics have stayed relatively even with just a small increase in practice income.
General surgery practices have had the most consistent income in the last five years.
“Physicians are accustomed to applying scientific methodology to patient care, but often fail to apply similar methodologies to monitor the ‘business health’ of their practices. The same physician that is closely monitoring a diabetic patient's lab-results against statistical norms may be ignoring her own practice’s expenses versus specialty benchmarks, to the risk of her practice’s financial health,” stated Tinsley.
For additional details, including the list of specialties, a sample report and pricing, visit the NSCHBC website at nschbc.org/statistics/index.cfm.