Two Paths to Greater Practice Revenue and Productivity

Searching for ways to increase practice revenues and productivity? The 2017 MGMA DataDive Cost and Revenue Survey provides some helpful insight. The Survey indicated that practices with higher staffing-to-physician ratios and non-physician provider (NPP)-to-physician ratios realized greater net revenues and higher provider productivity.

An article1 about the 2017 MGMA DataDive Cost and Revenue Survey highlights these two focus areas – each of which are emphasized in clinical care delivery model transformation. We can corroborate the findings based on our experience with clients. However, the key to achieving these favorable results is utilizing individuals at the top of their licenses and capabilities – which frequently requires reviewing and revising operational processes.

The first highlighted area involved the ratio support staff per provider. While the article acknowledges and distinguishes the differences in staffing between private practices and hospital-owned practices (hospital practices often have significant centralized, non-allocated or not fully allocated support for practices), the MGMA data indicated that “[p]ractices with more support staff per FTE physician not only report having higher levels of revenue, but also have increased productivity” … “[a]cross all specialties ….”1 We developed this impression a couple of years ago during our work with a large, highly reputable health system in central Pennsylvania. When we evaluated system-owned practices in various specialties across their system, some of the practices with the highest ratio of support staff to providers had the greatest levels of productivity compared to national benchmarks (MGMA, AMGA) and the highest levels of profitability.

However, before providers blurt out “see, I told you we just need more staff,” the drill down clearly showed that the staff were extremely well utilized in the practices. Each staff member had a significant role on the team and in patient flow. Each was used at the top of his/her license and “trained up” so that they could be used effectively at the top of their capabilities. These practices thrived in their care delivery model. In contrast, practices with similar staffing but without these crucial operational ingredients were notably much less productive and much less “profitable.” Thus, “more staff” alone does not equate to greater capabilities, revenue, or effectiveness. The additional staff must be integrated into clinical practice operations in a manner consistent with the tenets of clinical practice transformation processes to truly be effective.

These support staff ratio findings also call into question the wide spread practice of simply following staffing ratio benchmarks. Many organizations strive to control costs by controlling staffing levels, since personnel costs are often the greatest contributor to practice expenses. Many of these same organizations tend to stringently follow external staffing ratio benchmarks – like MGMA’s. This form of budget reduction initiative attempts to stem continuing or rising practice losses through the “cutting” approach – often to the practices’ and system’s detriment. The better approach is to systematically analyze practice operations, from the very front end to the very back end, to determine “real” opportunities to enhance revenue, eliminate waste, streamline care delivery, and enhance the bottom line. This approach is much more effective – but requires considerable investment … an intervention that seems counterintuitive when solely contemplating the immediate bottom line. Unfortunately, pressures of margins often overwhelm and overcome the more comprehensive approach.

The 2017 MGMA report validates the need to more critically evaluate practice function and pursue a comprehensive, long-term approach to practice efficiency and effectiveness – an approach that might require more investment to realize a greater return … both financially and functionally.

The second area highlighted in the article encourages the utilization of non-physician providers (NPPs). The article indicated that “[t]he practices with a higher non-physician provider (NPP) to physician ratio (0.41 or more NPPs per full-time equivalent [FTE] physician) earn more in revenue after operating cost than practices with fewer NPPs (0.20 or fewer NPPs per FTE physician) regardless of specialty.”1 This is a pretty significant endorsement for the utilization of NPPs. However, the same caveat applies – NPPs must be used at the top of their licenses and capabilities to realize those results. Too many physicians employ NPPs to fill the roles of scribes or gophers (“go for this or that”) – a tremendous underutilization of the asset.

Many prognosticators indicate that incorporation of NPPs into care delivery systems will be required to meet the demand for patient care services – whether we like it or not. Projections from the Association of American Medical Colleges2 predict an ongoing concern about physician shortages across most specialties – particularly in primary care and the medicine specialties/subspecialties. At the same time, the numbers of NPs and PAs will continually rise – and at a more rapid rate as the training cycle is shorter. The 2017 report anticipates the increasing integration of NPPs in the care delivery mix and predicts that “[t]he ratio of physicians to APRNs and PAs is projected to fall over time as the APRN and PA supplies grow at faster rates than physician supply. These projections suggest that the physician-to-PA ratio will fall from 7.2:1 in 2015 to 3.5:1 in 2030. The physician-to-APRN ratio will fall from
3.6:1 in 2015 to 1.9:1 in 2030.”

The acceptance of NPPs varies considerably across and within regions. The 2017 data indicate that coming to terms with NPP integration in practices can reap significant benefits. This data may help convert the recalcitrant among us.

The 2017 MGMA data provide two clear mechanisms to assist us in our search for practice management nirvana – enhanced net revenue and provider productivity. However, the desired results will not be achieved without significant sweat equity and process changes.

  1. “Analysis of U.S. medical groups finds adoption of non-physician providers and support staff among factors driving more profitable and productive groups”, MGMA Press Release, July 2017
  1. IHS Markit, “The Complexities of Physician Supply and Demand: Projections from 2015 to 2030”, prepared for the Association of American Medical Colleges, February 28, 2017