Increased costs and decreased revenue caused medical groups across the nation to struggle last year with sharply reduced margins, according to the Medical Group Management Association's annual Cost Survey Report.
Margins -- median total medical revenue after operating expenses -- declined by as much as almost 6% to $201,896 last year for internal medicine single-specialty practices, according to the report. The margin for primary care-only multispecialty practices not owned by hospitals fell by about 4%, to $217,315.
The report blamed the shrinking margins on several factors, including increased costs of support staff, which grew 4.6% on average. Median total operating costs per full-time physician grew 5.7%. Meantime, many medical groups continue to provide discounts to payers that further dilute margins. Professional liability costs remain a factor, climbing between 13% and 19% per full-time physician since 2003, according to the report.
In general, multispecialty groups fared a little better. Though these groups were squeezed by the same forces, including costs increases, their margins grew by 1.7%, according to the report.