MGMA: IT Costs for Healthcare Organizations Continue to Rise | Healthcare Informatics Magazine | Health IT | Information Technology Skip to content Skip to navigation

MGMA: IT Costs for Healthcare Organizations Continue to Rise

August 10, 2016
by Rajiv Leventhal
| Reprints
Since 2009, technology costs at physician-owned multispecialty practices have increased by more than 40 percent

According to new data from the Englewood, Col.-based Medical Group Management Association (MGMA), 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 2016 MGMA Cost and Revenue Report, a widely-used cost survey and benchmarking tool for healthcare organizations in the U.S. Since 2009, technology costs at physician-owned multispecialty practices have increased by more than 40 percent, the MGMA data shows, with 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.

Indeed, the HITECH incentives led to a significant increase in the number of organizations adopting electronic health record (EHR) 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.

Furthermore, 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.

What’s more, 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.

Other noteworthy nuggets from the report include:

•             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.

“While technology plays a crucial role in helping healthcare organizations evolve to provide higher-quality, value-based care, this transition is becoming increasingly expensive,” Halee Fischer-Wright, president and CEO of the Medical Group Management Association, said in a statement. “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.”

Get the latest information on Health IT and attend other valuable sessions at this two-day Summit providing healthcare leaders with educational content, insightful debate and dialogue on the future of healthcare and technology.

Learn More

Topics

News

Analysis: Healthcare Ransomware Attacks Decline in First Half of 2018

In the first half of 2018, ransomware events in major healthcare data breaches diminished substantially compared to the same time period last year, as cyber attackers move on to more profitable activities, such as cryptojacking, according to a new report form cybersecurity firm Cryptonite.

Dignity Health, UCSF Health Partner to Improve the Digital Patient Experience

Dignity Health and UCSF Health are collaborating to develop a digital engagement platform that officials believe will provide information and access to patients when and where they need it as they navigate primary and preventive care, as well as more acute or specialty care.

Report: Digital Health VC Funding Surges to Record $4.9 Billion in 2018

Global venture capital funding for digital health companies in the first half of 2018 was 22 percent higher year-over-year (YoY) with a record $4.9 billion raised in 383 deals compared to the $4 billion in 359 deals in the same time period last year, according to Mercom Capital Group’s latest report.

ONC Roundup: Senior Leadership Changes Spark Questions

The Office of the National Coordinator for Health IT (ONC) has continued to experience changes within its upper leadership, leading some folks to again ponder what the health IT agency’s role will be moving forward.

Media Report: Walmart Hires Former Humana Executive to Run Health Unit

Reigniting speculation that Walmart and insurer Humana are exploring ways to forge a closer partnership, Walmart Inc. has hired a Humana veteran to run its health care business, according to a report from Bloomberg.

Value-Based Care Shift Has Halted, Study Finds

A new study of 451 physicians and health plan executives suggests that progress toward value-based care has stalled. In fact, it may have even taken a step backward over the past year, the research revealed.