Financial Losses in Most Regions, Despite Increases in Physician Compensation

Newswise — According to findings in the American Medical Group Association's 2007 Medical Group Compensation and Financial Survey, most specialties saw modest increases in compensation in 2006. In that year, 92% of the specialties experienced increases in compensation, with the overall average increase around 4.8%. The primary care specialties saw about a 4% increase in 2006, while other medical and surgical specialties averaged around 6%. The survey also found that, on average, only organizations in the Western region were operating at a profit ($17,317 per physician), whereas organizations in the Southern region were operating at a significant loss (-$6,049 per physician).

The survey found that during 2006 the specialties experiencing the largest increases in compensation were pulmonary disease (11.51%), infectious disease (9.63%), psychiatry (7.54%), and cardiology " cath lab (7.08%). Interestingly, cardiac/thoracic surgery saw one of the largest decreases in compensation in 2006 (-2.13%), after having one of the largest increases in 2005 (11.47%), and cardiology saw only a modest increase in 2006 (1.99%) after a substantial increase in 2005 (10.21%).

"The survey indicates that compensation increases continue to fluctuate only marginally for most specialties," said Donald W. Fisher, Ph.D., president and chief executive officer of the American Medical Group Association (AMGA). "With the negative impact of declining reimbursements, competition for specialists, the cost of new technology, and other factors on practice revenues in most parts of the country, this situation is clearly unsustainable. Quality care and quality outcomes remain the highest priorities of these medical group practices, regardless of the downswings and negative variances in financial compensation. Increased capital outlays by the groups continue to be directed toward more robust health information technology to serve patients more effectively and efficiently, as well as toward enhancing patient educational programs and assessing patient satisfaction. The invested costs by medical groups in these enhancements remain in direct inverse proportion to the relevant compensation—if any—received from public and private payers."

The section of the survey that examines financial operations found that medical groups were operating at an average loss of $119 per physician (median performance per physician). Although this is a clear improvement over last year's findings (-$1,264 per physician) and most regions experienced improvement, medical groups in the Southern region continue to operate at a significant loss (-$6,049 per physician). In 2005, these groups were operating at an average loss of $1,539 per physician, and in 2004 they were operating at an average loss of $1,365 per physician. Medical groups in the Eastern and Northern regions also continue operating at a loss (-$3,727 and -$2,944 per physician, respectively), although Northern groups have seen substantial improvement since 2005 (-$8,111 per physician). Groups in the Western Region were performing much better—at $17,317 per physician—a significant improvement over last year ($7,970 per physician).

"In the face of the current economic climate, medical groups are rising to the challenge of delivering the highest quality, coordinated care to the patients they serve," commented Fisher. "One of the components contributing significantly to the trends in financial performance of medical groups is the current payment model, and groups will face an additional burden with changes in work RVU values. Most of the groups represented in the survey are large organized systems of care that make substantial investments in technology, operations, and the most innovative care processes to best serve populations under their care, and are able to achieve remarkable results for their patients. Our current transaction-based reimbursement system is indifferent to these results and to the efforts of medical groups to elevate the standard of care in the U.S. Currently AMGA is working to address the inequities of the current payment model and develop a model that incorporates a substantial component reflecting achievement of quality results and rewards the effective coordination of patient care." The AMGA 2007 Medical Group Compensation and Financial Survey gives a complete financial picture of medical group operations in one volume, providing compensation, productivity, and financial operations data from approximately 43,000 healthcare providers throughout the United States, including 111 specialties, 30 other healthcare provider positions, and 17 administrative positions. The survey data includes starting salaries by specialty; medians, means, and percentiles; compensation/productivity ratios; and comparative data from previous surveys, as well as providing analysis by group size and geographic region. In the financial section, profiles are provided per physician FTE, square footage, and work RVU. In addition to staffing profiles, the financial data includes medians, capitation impact, accounts receivable analysis, and department level analysis. A section examines data specific to the academic/faculty practice environment. This year, a special section examines the impact of 2007 CMS work RVU changes. The 20th annual AMGA compensation and financial survey was conducted by the national accounting firm of RSM McGladrey, Inc.

Surveys are also available for purchase for $250 to AMGA members and $495 to nonmembers. To order, visit AMGA Shop at or contact Stefan Rozga at (703) 838-0033, ext. 326.

AMGA is an association that represents medical groups, including some of the nation's largest, most prestigious organized systems of care. AMGA advocates for the medical group model of healthcare delivery and for the patients served by medical groups through innovation and information sharing, benchmarking, and continuous striving to improve patient care. The members of AMGA deliver health care to more than 50 million patients in 42 states. Headquartered in Alexandria, Virginia, AMGA is the strategic partner for medical groups providing a comprehensive package of benefits, including political advocacy, educational and networking programs and publications, benchmarking data services, and financial and operations assistance.