Primary Care Gains, While Specialists Feel Recession’s Bite

DENVER — Though it might not feel exactly like a boom time, primary care practices posted slight to significant revenue increases in the first year of the Great Recession, while mean multispecialty group revenue dropped for the first time in nearly 10 years.

The figures come from the Medical Group Management Association’s Cost Surveys 2009 report, based on a survey of large and small single-specialty and multispecialty groups conducted in 2008. The study was released at the MGMA’s annual conference in October

The data show clearly that the recession is impacting medical practices, evidenced by a 1.9% drop in mean total medical gross revenue. Fully one-third of all practices reported a decrease in total revenue. There was also a 9.9% drop in procedures (indicated by RVUs per patient), and an 11% decrease in total patient volume. Bad debt on fee for service payments from patients increased by 13%.

But the data showed some clear winners even in these difficult times. Pediatric group practices had a robust 9% increase in total revenue, and family practice groups reported a 3% mean rise. On the specialty side, cardiologists had a 7.9% mean increase in total revenue after operating costs.

The most heavily procedure oriented specialties took the biggest hit. For example, gastroenterologists saw a 5% revenue drop.

While it is encouraging to see primary care revenue increasing, it is still way too soon to say the recession has brought about meaningful wealth redistribution between specialty and primary care. And since MGMA’s 2009 report is based on 2008 questionnaires, it reflects only the earliest stages of the recession. The organization’s subsequent surveys will provide a more thorough picture.

Even if primary care income is on the rise, it is barely keeping pace with the rising costs of practice. Many groups, especially the small ones, are hanging on by their fingernails, said William Jessee, MD, President & CEO of MGMA.

Another new MGMA report, “Medical Practice Today: What Members Have to Say,” tells a lot about what practices are doing to survive these days. For one, they’re cutting support staff pay. The groups surveyed cut total staff payout by an average of 1.5%. But there were no concurrent changes in number of staff members. That means clinic employees are taking pay cuts. In some practices, the doctors themselves are taking home less money.

Thirty-five percent of practices have hiring freezes, and 34% say they’ve cut operating budgets. Thirty-seven percent said they have postponed capital expenditures.

Out in the communities, joblessness has had a serious impact. One-third of practices said they saw a rise in the number of uninsured patients in 2008.

It has become very difficult for small groups to survive, and they’re either merging with others to form larger entities or selling out to hospital systems and mega-groups.

The number of MGMA member groups owned by hospitals grew by 20% during the 5-year period from 2003 to 2008. During that time the average number of doctors in MGMA member group practices increased from 16 in 2003 to 19 in 2008. In hospital-owned groups, the mean number of physicians rose from 64 to 76, a 19% increase, Dr. Jessee said.


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