MGMA surveys show practice ownership, EHRs affect revenue

Hospitalist-owned practices and the specialist physicians employed by them report lower revenue than practices not owned by hospitals or integrated delivery systems.


Hospital-owned practices and the specialist physicians employed by them report lower revenue than practices not owned by hospitals or integrated delivery systems (IDS), according to survey data released by the Medical Group Management Association (MGMA) at its annual meeting in October.

The survey found that hospital- and IDS-owned practices reported considerably lower revenue than non-hospital-owned groups for 2009. The median revenue for a multispecialty practice not owned by a hospital was $798,608, compared to $448,597 for a hospital-owned group, per full-time equivalent (FTE).

“A lot of it is how you account for revenue,” said William Jessee, MD, MGMA president and CEO, at a press conference. “Non-hospital-owned practices count [revenue from] ancillaries, for example; hospital-owned practices don't.”

Specialists in hospital- and IDS-owned practices reported median total compensation of $294,984, compared to $353,549 in non-hospital and IDS-owned practices. Yet primary care physicians working in the former type of practice reported a median income of $192,116, compared to $179,688 in the latter, the survey found.

“The need for primary care coverage and referrals in hospital- and IDS-owned practices may contribute to the overall difference in compensation,” said Jeffrey Milburn of the MGMA Health Care Consulting Group.

Both types of practices reported better financial performance associated with the implementation of EHRs, according to another survey. Specifically, hospital and IDS practices using electronic health records (EHRs) reported $42,042 more in operating margin per FTE doctor than practices using paper records. EHR-using practices not owned by a hospital or IDS reported $49,916 more in operating margin. Further, non-hospital and IDS-owned practices that had had an EHR for five years reported 10.1% higher operating margins than those who were in the first year of having an EHR.

Many practices are loathe to implement EHRs, however, when there is a threat of reimbursement cuts due to Medicare's sustainable growth rate (SGR) formula, a third survey found. Forty-five percent of practices said they would likely delay buying an EHR system in response to cuts then-anticipated for Dec. 1, 2010 and Jan. 1, 2011. “It's a supreme irony that, on the one hand, the government is offering incentives to practices to purchase EHRs, but then plans to cut the SGR so they can't buy EHRs,” said Dr. Jessee.

About half of survey respondents also said they would stop seeing new Medicare patients if the cuts went through, and 28% said they would stop treating all Medicare patients altogether. Sixty-one percent said they were likely to reduce administrative support staff; 54% would reduce clinical staff; and 77% would delay buying new clinical equipment and/or facilities, if the cuts went through.

Two views of ICD-10

The switch to ICD-10 in 2013 will be good for hospitals and hospitalists, said Tony Trenkle, director of the Centers for Medicare and Medicaid Services' Office of E-Health Standards and Services, during an interview at the meeting.

ICD-10 is far more specific in its codes, thus will really pay facilities for all the work their employees do, he said. Meanwhile, hospitalists won't have the headache of trying to translate clinical speak (e.g., “severe hypertension”) into coding-speak (“accelerated hypertension”), as they do currently, he said.

“We engaged various societies and specialty organizations to make sure the [ICD-10 codes are] reflective of the communities that use them,” he said. “The current coding system is 30 years old.”

Dr. Jessee had a different opinion.

“The transition to ICD-10 is going to make Y2K look like a piece of cake,” he said during a press briefing.

Its two big problems are that it will require doctors to gather and document a lot more detailed information, and require payers to upgrade their systems at considerable cost.

An example of the former, from Dr. Jessee: “The new codes ask physicians to specify whether a patient suffered a laceration caused by a hockey stick or by a hockey puck. So you can see some ER doctor grilling a kid with blood all over his face, ‘Was it a stick or a puck? I need to know!’”

As for the second concern, there are mumblings that payers might just try to crosswalk back to the ICD-9 system instead of doing the upgrade to ICD-10, which could wreak havoc, Dr. Jessee said. “This has all the makings of a train wreck waiting to happen,” he said.