Physician Groups Struggle With Lower Revenue and Utilization
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For the first time in several years, medical practice revenue declined in 2008. According to the newly released MGMA Cost Survey: 2009 Reports Based on 2008 Data, multispecialty group practices reported a 1.9 percent decrease in total medical revenue. Although it may not seem like much, in an industry where operating costs are rising faster that revenues, any decline presents a challenge.
Not surprisingly, the driving factors hint to a tough economy: a drop in patient volume and increasing bad debt due to patient financial hardship. In response, practices have trimmed overhead costs, but not enough to make up for shrinking revenue. Here are three key findings from this year’s report.
Each medical specialty’s cost and revenue drivers are distinct, but overall we saw a drop in patient volume comprising a 9.9 percent decline in number of procedures performed and an 11.3 percent decline in number of patients from 2006 to 2008. Plus, bad debt in multispecialty group practices from fee-for-service charges increased 13 percent in the same time period, suggesting that some patients may be having a harder time paying their medical bills.
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