Multispecialty medical groups' operating costs per physician rose 3.1% in 2003, compared with a 3% increase in medical revenue, continuing a recent trend, according to the Medical Group Management Association. Expenses grew faster than revenue despite groups' cost-cutting efforts -- the average group lowered spending on registered nurses about 3.4% and reduced housekeeping, maintenance and security spending by about 14% in 2003, the MGMA said, releasing its latest cost report at its annual meeting in San Francisco. "What the MGMA survey does not show is whether the groups are doing without important resources or whether they actually increase efficiency," said Daniel Stech, director of the MGMA's survey operations.
Pediatric and family medicine practices reduced total operating costs by about 2.4% in 2003 against a decline in total medical revenue of about 4.3%, in both cases slightly decreasing full-time-equivalent support staff. Orthopedic surgery practices had the greatest increase in operating costs -- 7.3% in 2003 and a total increase of 36% since 1998. Fees paid to management service organizations rose about $9,000 per physician, suggesting that groups outsourced more functions or responsibilities as they cut staff. Meanwhile, medical liability premiums for multispecialty practices jumped nearly 23%. -- by Michael Romano