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Analysis

MGMA Highlights Keys to Success for Physician Practices

By Christopher Cheney  
   October 20, 2020

In its 2020 best performers data report, MGMA rates physician practices on operations, profitability, productivity, and value.

The Medical Group Management Association (MGMA) has released its 2020 best performers data report on physician practices.

MGMA evaluated nearly 4,000 medical groups on four metrics: operations, profitability, productivity, and value. More than 1,000 of the medical groups rated highly on at least one of the metrics, earning "better performer" status.

  • Operations: Less than the median for percentage of total accounts receivable over 120 days, less than the median for days adjusted fee-for-service charges in accounts receivable, and greater than the median for adjusted fee-for-service collection percent
     
  • Profitability: Less than the median for total operating cost per work relative value unit (RVU), less than the median for total cost per total RVU, less than the median for total operating cost as a percent of total medical revenue, and greater than the median for total medical revenue after operating cost per physician
     
  • Productivity: Greater than the median for total medical revenue per physician, greater than the median for total medical revenue per staff, greater than the median for work RVUs per staff, and greater than the median for provider work RVUs for at least 66% of providers
     
  • Value: Physician practices report quality metrics and practices qualify for better performer status in at least one other category

The MGMA report, which is based on 2019 data, includes several key data points and benchmarks:

  • Compared to lower performing practices, better performer practices reported nearly 9% higher medical total operating cost per full-time-equivalent (FTE) physician. Better performer practices also reported 19% higher median total physician compensation and benefits. These findings indicate better performers benefit from investments in staff, facilities, and operations, the report says.
     
  • Better performers have higher staff levels and slightly higher expenses. Better performers had 20% more business office staff and 18% more nursing staff than the median for all medical groups. Business office staff help drive accounts receivable collections. Additional nursing staff help clinicians to see more patients, which increases practice productivity. For example, better performers had 20% more patient visits and 10% greater total RVU production.
     
  • Based on the percentage difference between better performers and all practices, better performers have higher total compensation, ranging from 8.36% for general surgery to 27.76% for dermatology.
     
  • Based on the percentage difference between better performers and all practices, better performers have higher productivity as measured by work RVUs, ranging from 15.56% for family medicine to 29.63% for dermatology.
     
  • Better performers collect at least 6% more accounts receivable in the first 30 days.
     
  • Better performers earn at least 40% more in total medical revenue after operating cost compared to all reporting practices.

Interpreting the data

The ability to see more patients helps drive higher compensation at better performer physician practices, Andy Swanson, MPA, vice president of industry insights at Englewood, Colorado-based MGMA, told HealthLeaders. "With many medical groups having pay tied to production, more patients seen is going to net out on dollars spent for clinicians seeing patients."

Efficiency is pivotal in maximizing work RVUs, he says.

"The first step is an in-depth, minute-by-minute analysis of what a patient visit looks like, so you can identify waste or time that can be cut. Once you have done that in-depth analysis, then you get into the tools to enable a patient visit, which inevitably comes down to your electronic health record. Whoever is taking notes on a patient—whether it is a scribe, nurse, or doctor—you need to know whether that process for entering information on the patient's chart and for billing is going as smooth as it can go."

To maximize collection of accounts receivable, physician practices need to understand the payer profile of patients, Swanson says.

"You must understand not just what the patient is coming in for, but also what the patient's payment options are going to be. Do they have a government payer? Do they have a commercial payer? Or are they a self-pay patient? Once you understand who the payer is, you need to understand the financial obligations of the patient before they walk through the door, so that things like deductibles and co-pays are collected."

Different payer profiles require different accounts receivable approaches, he says.

"For government pay and commercial pay, you need to know the terms of payments on the patient's part vs. the carrier's part. If you have a self-pay patient, you need to come up with a rigorous payment plan or methodology that the clinic follows every time a self-pay patient comes in. That may look like $25 for a typical visit, then a payment plan for the next 30 days after care to get to full payment."

Financial benchmarks are important and an indicator of success, but medical groups seeking to improve their performance need to look deeper at factors related to operations, profitability, and productivity, Swanson says.

"If medical groups want to take action on financial outcomes, they are going to need to look at a myriad of key performance indicators that drive the financial measures. Spending time on those key performance indicators is where medical groups find success in moving the financial-benchmarks needle."

Related: MGMA: Physician Compensation Grew in 2019

Christopher Cheney is the senior clinical care​ editor at HealthLeaders.


KEY TAKEAWAYS

In the MGMA's 2020 best performers data report, about one-quarter of medical groups rated highly on at least one of four key metrics.

Compared to all medical groups in the report, better performers have higher total compensation, ranging from 8.36% for general surgery to 27.76% for dermatology.

Better performers earn at least 40% more in total medical revenue after operating cost compared to all reporting practices.

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