Medical practice managers struggle most with managing costs, finances, EHR adoption

In wake of recession, most report decreasing revenues and budget cuts

ENGLEWOOD, Colo., June 29, 2010 - For the third year, medical practice professionals sounded off to the Medical Group Management Association (MGMA) about their biggest daily challenges, as well as their struggles to safeguard their practices' financial solvency despite a failing economy.

According to the MGMA 2010 "Medical Practice Today: What Members Have to Say" research, the top three challenges of running a group practice are:

1. Dealing with rising operating costs
2. Managing finances with the uncertainty of Medicare reimbursement rates
3. Selecting and implementing a new electronic health record system

"It is not surprising that 'maintaining finances with the uncertainty of Medicare reimbursement rates' jumped to the No. 2 spot this year due to the continued congressional irresponsibility in not permanently addressing the flawed sustainable growth rate (SGR) formula," said William F. Jessee, MD, FACMPE, president and CEO of MGMA. Medicare reimbursement rate uncertainty had ranked No. 5 in both 2008 and 2009.

Beyond these core challenges, MGMA observed interesting trends in its annual ranking of challenges and the issues represented. An organizational governance issue MGMA introduced to the list this year, "managing teamwork and group dynamics among physicians," debuted at No. 8. "Implementing a patient-centered medical home model of care" made the biggest leap from last year's list (from No. 22 to No. 12).

"Practices are clearly balancing the very serious issue of keeping their practices afloat amid unprecedented financial uncertainty with the more delicate practice management issues such as managing group dynamics and overseeing their organizations' strategic direction," Jessee added. "It's a testament to the profession of medical practice management that they must find a way to survive and move forward despite the dynamic and challenging environment in which they practice."

Differences by type of practice
When analyzed by type of practice, MGMA found that when compared with independent medical practices, hospitals and health system respondents were more likely to find the following issues "challenging":

  • Modifying physician compensation methodology
  • Recruiting physicians
  • Dealing with rising operating costs
• Implementing a patient-centered medical home model of care

However, hospitals and health system respondents were less likely than independent medical practices to be challenged by "maintaining physician compensation levels" and "negotiating contracts with payers."

Effect of the recession
For a second year, MGMA also asked study participants how the recession is affecting their medical groups and how they are responding. The participants indicated the effects of the recession on their practices are:

1. Improved billing collections and/or denial management processes
2. Decreased revenue
3. An increase in uninsured patients
4. Postponed capital expenditures
5. Operating budget cuts

While these same issues ranked as the top five issues in 2009, the percentage of respondents who saw an increase in uninsured patients or postponed capital expenditures dropped this year. Among the ranking of the recession's effects, "staff salary freeze" accounted for the biggest jump in rank, moving up from No. 12 to No. 6. 

From February 12 through March 5, MGMA invited members via e-mail to participate in a Web-based questionnaire about their practices and the economic challenges they face today. MGMA received responses from 1,798 individuals. The research is featured in the July 2010 MGMA Connexion magazine.

Listen to MGMA Researchers Jim Margolis and Jill Groark discuss this research and medical groups' biggest challenges.