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AMGA: Physician Practices Falter on Thinning Margins

 |  By John Commins  
   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."

Indeed, a Merritt Hawkins’ survey released in June showed that most job openings for physicians are in hospitals, while demand for private practice physicians is on the wane.

The compensation portion of the survey found that 69% of the specialties experienced increases in compensation in 2010, with the overall average increase around 2.4%. In 2009, 76% experienced an average increase around 3.8%.

The primary care specialties saw about a 2.6% increase in 2010, while other medical specialties averaged an increase of 2.4% and surgical specialties averaged around 3.8%. Primary care and surgical specialties saw about a 3.8% increase in 2009, while other medical specialties saw 2.4%.

The survey results show that during 2010, the specialties experiencing the largest increases in compensation were allergy (6.38%), emergency medicine (6.37%), and hospitalist/internal medicine (6.29%).

Flatt says the compensation packages are being driven "primarily" by supply and demand.

"We've seen this trend in the past decade or so, that certain spikes in the salaries of certain specialties, maybe because the specialty hasn't seen a large pay raise in a long time and demand has suddenly become greater because less people are going into that field, or because of the demand for certain specialties," he says. "Allergies is one of those that we've seen just take off." 

See Also:
MGMA: 'Mixed Movement' on Physician Compensation

 

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

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