Annual Survey Tracks Trends

Rising Operating Costs Top List of Medical Practice Concerns

August 08, 2013 04:47 pm Sheri Porter

According to 1,067 medical practice executives, the most difficult daily challenge of running a medical office is dealing with rising operating costs. That finding represents just one point of interest revealed by the MGMA-ACMPE (formerly the Medical Group Management Association-American College of Medical Practice Executives) in its sixth annual survey of medical practice executives.

[Stock Photo-Doc sitting at desk writing in notebook]

The 2013 results were based on research conducted between Jan. 11 and Feb. 4, 2013. MCMA-ACMPE invited members to participate in a Web-based questionnaire about their practices. Participants rated 54 issues and assessed, based on a five-point scale, how those challenges affected their daily work.

The research article about the survey, "Medical Practice Today: What members have to say(," was published in the July issue of MGMA's Connexion magazine. MGMA-ACMPE members have free access to the publication; nonmembers can sign up for a 30-day free trial.

According to a press release about the research(, the remainder of the top five list of challenges, ranked by decreasing level of difficulty, was

  • gearing up for reimbursement models that expect practices to shoulder increasing financial risk,
  • overseeing practice finances while dealing with uncertain Medicare reimbursement rates,
  • getting paid by patients who self-pay or participate in high-deductible and health savings account insurance plans, and
  • comprehending the total cost of an episode of care.
Story Highlights
  • Results of an annual survey of medical practice executives place rising operating costs at the top of the lists of concerns for 2013.
  • Overall, financial management issues filled out the top five positions in the list of most pressing concerns.
  • Comparing and analyzing 2012 and 2013 survey results help provide a roadmap showing what drives changes in perceived challenges.

"Physician practices are doing more and more to innovate and respond to our rapidly changing environment to meet the needs of their patients, but with fewer resources," said MGMA-ACMPE President and CEO Susan Turney, M.D., in the press release.

She noted that physicians simultaneously manage increasing operating costs and plan for possible payment cuts. They also are gearing up to take on additional federal mandates such as the 2014 start date for health insurance exchanges. "It's understandable that financial management issues rank among the most pressing concerns for our members," said Turney.

David Gans, M.S.H.A, an MGMA-ACMPE senior fellow in industry affairs, told AAFP News Now that the purpose of the annual survey is to step back at the beginning of each calendar year and find out what's really going on in America's medical practices, especially as related to practice management issues. "What keeps people up at night, what are they really concerned about and what do they think is happening in the industry? We're trying to answer all of those questions and put it in a snapshot of what's important," said Gans.

Comparing and analyzing 2012 and 2013 results helps provide a roadmap as to what drives changes in perceived challenges. For example, rising operating costs jumped to No. 1 this year from No. 4 in 2012, but why?

"What does 'rising costs' mean?" asked Gans. He noted that the cost of medical services has risen faster than inflation. "Over the last 11 years, we've seen the cost of running a medical group go up twice as fast as the consumer price index," in part because practices have to hire and retain good employees. "Practices are competing with hospitals for quality staff, and hospitals have deeper pockets," said Gans.

It matters, too, that physicians are performing more procedures in their practices, procedures that in the past were scheduled for inpatient or ambulatory care settings. Those procedures often require additional space, personnel and equipment, said Gans. At the end of the day, total medical revenue may rise, but not at the same rate as practice costs, according to Gans. "The doctor only has so many hours in a day."

The No. 4 item in 2013 -- collecting from patients who self-pay or have high-deductible plans and health savings accounts -- sat at No. 7 in 2012.

"Think about what's happening in the health insurance industry," said Gans. He noted that health insurance profits are stagnant, in part, because of the medical loss provision in the Patient Protection and Affordable Care Act that requires insurers to spend at least 80 percent of premium dollars on medical care.

As a result, when an insurance company works with an employer client to reduce costs, "one strategy is to increase the deductible and then pass costs onto the employees," said Gans. As a result, a greater percentage of patients have high deductible plans.

"Practices have to look at how to manage collections," said Gans, and that's likely to increase in importance with the implementation of the health insurance exchanges. He pointed out that many of the people who will be seeking coverage through the exchanges are uninsured. They likely will choose the "bronze plan," a low-cost premium, high-deductible option.

On the other hand, practices may stand on firmer ground in coming years when it comes to contract negotiations with payers. That issue popped onto the 2013 list at No. 9 even though it was absent from the "top 10" list in 2012.

"Contract negotiation is evolving. I'm really watching what's happening here," said Gans. He predicted that because payers are seeing increased competition in many areas, the "take-it-or-leave-it" contract that has frustrated smaller practices, in particular, may become less prevalent nationwide.

"There is an opportunity for contracting that hadn't occurred previously," said Gans. "There is an increased understanding in medical groups of the importance of getting a good contract because it lowers administrative costs, improves payment levels and ensures that physicians are paid appropriately for the work they did."