MGMA: Practice revenues fall, but urology fares better than others

For the first time in several years, revenue in medical practices declined in 2008, according to data from the Medical Group Management Association (MGMA). Urology, however, was one of a handful of specialties reporting increases in total medical revenue after operating costs.

The drop may be tied to smaller patient volumes and increasing bad debt due to patients’ financial hardship, the MGMA reported. Medical practices responded by trimming overhead costs, but not enough to accommodate shrinking revenues.

According to the MGMA cost survey, multispecialty group practices saw a 1.9% decrease in total medical revenue in 2008. MGMA captures data on both multispecialty groups and single-specialty practices, but uses multispecialty data as a proxy for overall trends.

In terms of specific specialties, OB/GYN and gastroenterology practices experienced decreases in total medical revenue after operating costs. Urology, cardiology, family practice, anesthesiology, pediatrics, and orthopedic surgery fared better, reporting increases.

While each medical specialty’s cost and revenue drivers are unique, MGMA said falling revenues may be attributable to a decline in patient volume, indicated by a 9.9% drop in the number of procedures and an 11.3% slump in the number of patients from 2006 to 2008.

Additionally, bad debt in multispecialty group practices from fee-for-service charges increased 13% from 2006 to 2008, suggesting that patients may be having a harder time paying their medical bills.

MGMA data indicate that total operating cost increased 54% in multispecialty group practices in the past 10 years, while total medical revenue increased 46%. Overall cost increases were due to a variety of factors, including increases in drug supply costs, support staff costs, and professional liability fees.