Medical practices that add nonphysician staff often see revenue gains

It may sound like a contradiction, but medical groups that hire more nonphysician providers and key support staff can also increase revenues, according to a new report.

An analysis of U.S. medical groups finds that hiring more nonphysician providers and support staff are among the factors that can drive more profitable and productive practices, according to the report from the Medical Group Management Association.

“Contrary to what some may believe, with increased staffing come much larger gains in revenue after operating cost, as well as productivity,” said Halee Fischer-Wright, M.D., MGMA’s president and CEO, said in an emailed announcement.

The group's annual cost survey continues to show the importance of nonphysician providers and support staff in both physician practices and hospitals, along with other factors that impact practices’ bottom line, she said. The report was based on data of more than 2,900 organizations and 40 specialties and practice types.

The 2017 MGMA DataDive Cost and Revenue Survey, which must be purchased, found that between 2015 and 2016, operating expenses at physician practices increased at almost the same rate as revenue. The practices that were able to increase revenues owe that namely to increased nonphysician providers, such as nurse practitioners and physician assistants (PA), and support staff.

A report released this week found PAs are continuing to move into specialty areas, where their average salary is more than $140,000.

RELATED: Physician assistants continue to move into specialty areas, including hospital medicine and surgery

Practices with a higher nonphysician provider to physician ratio earn more in revenue after operating costs than practices with fewer nonphysicians, regardless of specialty, according to the MGMA report.

RELATED: Bigger signing bonuses, demand for nonphysician providers in 2016

A report from The Medicus Firm released earlier this year found there was a greater demand for advanced practice clinicians for the fourth consecutive year.

Other factors that impact practices’ bottom line, according to the MGMA report, include:

Information technology expenses, which can be upwards of $19,000 a year for each physician. IT expenses continued on a slow and steady rise for most practices, with physician-owned practices spending anywhere from $2,000 to $4,000 more per physician within the last year. An earlier MGMA report said the cost of health information technology has reached more than $32,500 per doctor annually.

RELATED: Health IT costs top $32K per doctor per year

Payer mix. Primary care practices with a lower percent of government payer mix report higher operating costs and even higher revenue after operating costs per FTE physician in both physician-owned and hospital-owned practices. Physician-owned primary care practices with a mix of 30% or less saw $159,307 more in revenue per doctor than those with a mix of 50% or more. The difference was even greater in hospital-owned practices, which saw $221,497 more in revenue per physician.

Drug costs. Drug supply costs also continued to climb for practices, increasing by more than 10% from 2015 to 2016.

Practices with more support staff not only report higher levels of revenue, but also increased productivity. The report also found that physician-owned practices have more support staff than hospital-owned practices, which have the opportunity to consolidate business office functions and centralize services for multiple practices.