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AMGA: Physician Practices Falter on Thinning Margins

John Commins, for HealthLeaders Media, August 17, 2011

Physician groups across the country operated at a significant loss in 2010, thanks largely to dwindling Medicare reimbursements. At the same time physician compensation increased by an average of 2.4%, according to the American Medical Group Association's 2011 Medical Group Compensation and Financial Survey.

"The trends are pretty much continuing and have been consistent over the last six years of so. The operating margins are getting smaller and the pay increases are getting smaller as well," Tom Flatt, director of communications and publications at AMGA, told HealthLeaders Media.

The survey of 239 medical groups -- 55% of which had more than 100 physicians -- found that operating margins are getting thinner. In 2010, only physician groups in the Western region of the nation were nearing break-even (-$27 per physician). 

All other regions were operating at a loss: the Eastern region averaged a loss of $1,597 per physician; the Southern region averaged a loss of $1,870; and the Northern region continued to experience significant losses (-$10,669 per physician in 2010, compared to -9,943 per physician in 2009).

Flatt says that many of the physician groups were able to offset Medicare reimbursement cuts through ancillary services like pharmacy and imaging. But concerns about cuts to reimbursements remain.

"We are hearing from our own groups who are anticipating significant cuts in Medicare that they are really worried about it. They are operating at such a small margin now that this will have a tremendous impact on access for patients," Flatt says. "They're really feeling like they are on the edge of a cliff and without some sort of revenue, it's really going to impact patient care."

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