Integrated systems, hospitals losing more money than private practices

Integrated health systems posted operating losses of approximately $210,000 per physician in 2015 compared to $14,000 per physician in private practices, according to a survey from the American Medical Group Association (AMGA), with hospitals' medical practice subsidiaries losing $250,000 per physician. 

Fifty medical groups representing more than 10,000 physicians responded. Private practices accounted for 22 of the 50 , 14 were integrated systems, nine were hospital-owned and another five were classified as “other.” Half of respondents (25) reported employing 150 or fewer full-time equivalent (FTE) physicians.

When comparing the private practices with integrated systems and hospitals, private practices consistently outperformed them financially. For example, the median net revenue per physician for private practices was nearly $1.2 million, compared to $635,000 for hospitals and their medical practice subsidiaries and $556,000 for integrated systems.

“At a glance, the discrepancy between integrated health systems and private practices seems significant,” Tom Dobosenski president of AMGA’s consulting services, said in a statement. “It’s essential, however, to look at the many financial indicators that make up operating performance and compare those details across different organizational structures to gain a better understanding of true financial performance,”

When the financial compares operational expenses and salaries, integrated systems tended to spend more than private practices on physician benefits, nursing salaries, professional fees and bad debt expense. Private practices spent more in most areas, however, including salaries for physicians, CBO/patient accounting and IT positions.

The survey’s overall staffing profile noted practices appear to need more IT professionals than staff.

“While it is somewhat expected that Patient Accounting and Operations top the staffing chart, it’s interesting to note that the median response adjusted to 100 physician FTEs requires 17 IT FTEs,” Dobosenski said. “Factors contributing to the prominence of IT FTEs may be the growing need for the ability to manage quality and service metrics and preparation for risk as the market shifts from volume to value.”

Private practices spent nearly twice as much as integrated and hospital groups for some expenses, such as expense for medical, surgical and drug supplies, furniture and equipment expenses, and building and occupancy fees.