MGMA Surveys Reveal Practices’ Cost Struggles, Productivity Challenges

Three Medical Group Management Association (MGMA) surveys show physician
group practices battling rising costs in cardiology and orthopedics and
constrained production in field of anesthesia.

The MGMA Cost Survey for Cardiovascular/Thoracic Surgery and Cardiology
Practices: 2007 Report Based on 2006 Data showed that median total medical
revenue flattened in cardiology practices from 2005 to 2006. The $8,126
decline in total medical revenue per full-time-equivalent (FTE) physician
represented a .72-percent decrease—a divergence from the past two years,
which averaged a 4.7 percent annual increase.

While revenues declined in cardiology groups, operating costs increased 3
percent—from a median of $522,303 per FTE physician in 2005 to $538,135 in
2006. The combination of decreased revenue and increased cost reflects in an
increase in practice overhead, with median total operating cost as a
percentage of revenue increasing 12.2 percent since 2000.

The MGMA Cost Survey for Orthopedic Practice: 2007 Report Based on 2006 Data
Orthopedic Practices saw median operating costs and revenues per FTE
physician increase at nearly identical rates from 2005 to 2006—2.4 percent
for the former (from $503,949 to $516,359) and 2.2 percent for the latter
(from $1.12 million to $1.14 million).

Since 2003, orthopedic groups’ costs have risen a total of 14.6 percent, or
about 4.6 percent a year, according to the report. Medical revenue mirrored
this trend, rising about 4.6 percent a year, or a total of 14.6 percent,
during the same period.

The MGMA Cost Survey for Anesthesia and Pain Management Practices: 2007
Report Based on 2006 Data offers a different picture than the other reports.
Practices experienced about a 10 percent plunge in operating costs and a 5.1
percent bump in revenue from 2005 to 2006, the survey shows. However, the
revenue growth reversed two consecutive years of decline—a 2 percent drop
from 2004 to 2005 and a 2.9 percent dip from 2003 to 2004. Operating costs
have been erratic—decreasing by 6.1 percent from 2003 to 2004, only to rise
by 5.2 percent from 2004 to 2005.