Advanced practice and nurse practitioners bring more profit, productivity to medical practices

Medical practices with more advanced practice practitioners, nurse practitioners and other non-physician providers are more profitable and productive, according to a new report.

While primary-care practices with a higher non-physician provider-to-physician ratio—at least 0.41 non-physician providers per physician—have higher expenses, they also earn more in net income than practices with fewer non-physician providers (0.20 or fewer per physician), according to the Medical Group Management Association's analysis of more than 3,000 providers.

Physician-owned practices with more non-physicians earned $100,748 more in net income. That difference was $131,770 in hospital-owned primary-care practices.

Also, more productive multispecialty practices earned 160% more in total revenue and had almost three more support staffers per physician than their lower-producing counterparts, MGMA researchers found.

Not only is it beneficial to the bottom line, it forms a comprehensive care team, said Ken Hertz, principal consultant at the MGMA.

"The other piece that is critical to this is how the physicians and non-physician providers work together," he said. "That is going to be a critical factor to ensure success and maximum revenue and highest quality of patient care."

The role of the nurse practitioner is growing and it's becoming a more common career path. There are nearly 248,000 licensed nurse practitioners nationwide, up from 120,000 in 2007, according to a study released this year from the American Association of Nurse Practitioners.

But there is stigma sometimes associated with non-physicians, so providers must be upfront with patients, letting them know that an advanced practice practitioner will be working with them for follow-up appointments, for instance, Hertz added.

There is also internal conflict regarding what role nurse practitioners should play. In 2016, the American Medical Association criticized the Veterans Affairs Department's consideration to grant full autonomy to nurse practitioners, arguing that doctors should take the lead.

But amid a growing physician shortage across the country, non-physician providers will play an increasingly important part in healthcare delivery, said Dr. Halee Fischer-Wright, CEO of the MGMA.

"By utilizing more non-physician providers in their practice, administrators can actually boost their practices' revenue and productivity by allowing physicians to focus on the most acute cases," she said in a statement.

Some health systems have run into trouble as they've acquired too many physicians and physician groups too fast. When they pay a subsidy of $150,000-plus per physician and don't have control over their referral network, providers can take a significant financial hit.

MGMA researchers found that median operating costs for primary-care practices have risen by 13%, from $391,798 per physician to $441,559 over the past five years. General operating costs make up 32 cents of every dollar collected in physician-owned practices. Of that, information technology represents 2 cents, drug supply 6 cents and building occupancy another 6 cents.

While hospital-owned practices' general operating expenses related to supplies and services are on the rise, practice support staff costs have fallen since 2013, MGMA data show.

"It's possible that on the hospital-owned practice side, good things are happening related to effectively managing support staff costs," Hertz said.

Total expenses have risen faster for physician-owned practices, according to MGMA data, which may explain why more are migrating to health systems.

For every $1 in revenue, physician-owned practices spend anywhere from one-third to one-half of that money on physician expenses, MGMA researchers found. Another 20 to 30 cents are spent on support staff costs, and the same amount is spent on general operating costs.