What Makes a Medical Practice Profitable?

Sandra Levy


October 12, 2017

Why Do Some Practices Perform Better?

The Medical Group Management Association (MGMA) unveiled key findings from the 2017 MGMA DataDive Better Performers data report at its annual conference, held this week in Anaheim, California.

The report provides insights into the performance of US medical practices and includes a benchmark for understanding how to improve practices in the areas of operations, profitability, productivity, and value.

David Gans, MGMA senior fellow for industry affairs, told Medscape, "We have done the Better Performers report for many years. This year we changed the criteria substantially. We are looking not only at issues of finance, but at how well the practice did, consistent with good operations."

Practices were rated on how well they:

  • Achieved higher revenues while controlling operating expenses;

  • Monitored IT expenditures;

  • Achieved greater physician productivity; and

  • Increased patient portal usage.

The goal was to measure how the practices displayed overall effectiveness in faster patient scheduling, same-day appointment availability, and minimizing no-shows and cancellations. Of note, the research showed that better-performing practices among those that were physician-owned spent less in information technology (IT) costs per full-time equivalent (FTE) physician than all reporting practices, while their hospital-owned counterparts reported spending more. For example, on average, physician-owned primary care practices spent $3685 less on IT expenses per FTE physician, compared with $1216 more spent by hospital-owned practices.

Across the board, better-performing practices reported spending less on operating expenses. They also reported earning more in total medical revenue after operating costs.

Overall, physicians in most better-performing practices reported higher productivity. Many also reported earning more in total compensation.


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