Healthcare Technology Costs Top $32,500 per Physician

2016 MGMA survey results reveal continued rise in IT costs for healthcare organizations nationwide, which increased by more than 40% per physician since 2009

ENGLEWOOD, Colo. – As they move to digitize their practices and patient medical records, healthcare organizations across the country continue to grapple with significant increases in information technology costs. According to new data from Medical Group Management Association, physician-owned multispecialty practices spent more than $32,500 per full-time physician on information technology equipment, staff, maintenance, and other related expenses in 2015.

The findings come from the MGMA 2016 Cost and Revenue: 2016 Report Based on 2015 Data, which is the largest and most representative cost survey and benchmarking tool for healthcare organizations in the United States.

“While technology plays a crucial role in helping healthcare organizations evolve to provide higher-quality, value-based care, this transition is becoming increasingly expensive,” said Halee Fischer-Wright, MD, MMM, FAAP, CMPE, president and CEO of the Medical Group Management Association. “We remain concerned that far too much of a practice’s IT investment is tied directly to complying with the ever-increasing number of federal requirements, rather than to providing better patient care. Unless we see significant changes in the final MIPS/APM rule, practice IT costs will continue to rise without a corresponding improvement in the care delivery process.”

Since 2009, technology costs at physician-owned multispecialty practices have increased by more than 40 percent, the MGMA data shows. The largest increase in technology costs occurred between 2010 and 2011, corresponding to implementation of the 2009 Health Information Technology for Economic and Clinical Health (HITECH) Act, which incentivized physicians and others to use certified electronic health records. The HITECH incentives led to a significant increase in the number of organizations adopting information technology systems. However, these incentives tapered down significantly after 2011, requiring practices to shoulder a larger percentage of the cost to upgrade and maintain the technology.

The growing adoption and complexity of healthcare IT may have also contributed to the growing IT staff expenses practices have experienced in recent years. Physician-owned multispecialty practices have seen steady year-over-year increases in IT staff expenses, which have escalated by nearly 47 percent per full-time physician since 2009. Increased staff costs suggest that larger investments in technology have yet to result in significant administrative efficiencies for practices.

Other trends in the healthcare industry may have also contributed to increased technology costs. For example, many practices have invested in online patient portals that allow patients to view their personal health information, make payments, or schedule appointments online, among other functions. More than 50 percent of nearly 850 respondents to a recent MGMA Stat poll – a real-time text-based polling initiative – reported that patients can request or make appointments via their practice’s patient portal.

Furthermore, total operating costs are growing throughout the healthcare industry, putting greater pressure on practices as they move toward providing value-based care. Physician-owned multispecialty practices reported that total operating costs increased by nearly 15 percent per full-time physician in 2015, according to the new MGMA data, outpacing the more than 10 percent increase in total revenue these practices enjoyed last year.

More information can be found in the complete MGMA 2016 Cost and Revenue Report, which offers additional insights into healthcare organization costs, staffing, and revenues, including:

• Physician-owned multispecialty practices that are part of an accountable care organization (ACO) enjoyed lower costs and higher total medical revenue after operating costs last year than in 2014.
• Examining the payer mix for multispecialty groups with both primary and specialty care in 2015, Medicare accounted for a nearly identical share of charges – roughly 33 percent – at both physician-owned and hospital-owned practices. However, hospital-owned practices reported that Medicaid represented 14 percent of charges last year, which is more than twice the nearly 7 percent reported by physician-owned groups.
• Physician-owned specialties reported having a higher total number of full-time support staff on payroll – including personnel who oversee business operations, the front office, and clinical support – than their hospital-owned counterparts did in 2015. However, primary care specialties at both physician and hospital-owned practices reported a small decline in total support staff throughout the past two years, while nonsurgical and surgical specialties reported support staff increases over that period.

The MGMA 2016 Cost and Revenue Report also includes detailed cost and revenue data for healthcare organizations broken down by specialty, ownership and geographic region.

Purchase the report now.

About MGMA

The Medical Group Management Association (MGMA) helps create successful medical practices that deliver the highest-quality patient care. As the leading association for medical practice administrators and executives since 1926, MGMA helps improve members’ practices through exclusive member benefits, education, resources, news, information, advocacy, and networking opportunities, and produces some of the most credible and robust medical practice economic data and data solutions in the industry. MGMA advances the profession of medical practice management with its industry-leading board certification and Fellowship programs through the American College of Medical Practice Executives.

Through its national membership and 48 state affiliates, MGMA represents more than 33,000 medical practice administrators and executives in practices of all sizes, types, structures and specialties, which represent more than 275,000 physicians and more than 46 percent of the healthcare delivered in the United States. MGMA is headquartered in Englewood, Colo., with a Government Affairs office in Washington, D.C.