The Medical Group Management Association (MGMA) 2016 Cost and Revenue Report, released in August 2016, found that IT costs have increased by more than 40 percent per physician since 2009.

Health care organizations are working to digitize their practices and patient medical records, leading to significant increases in IT costs. The study also found that physician-owned multispecialty practices spent more than $32,500 per full-time physician in 2015. That cost included physical IT equipment, staff, maintenance, and other IT-related expenses.

“While technology plays a crucial role in helping health care organizations evolve to provide higher quality, value-based care, this transition is becoming increasingly expensive,” said Halee Fischer-Wright, CEO of 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.”

The largest increase in technology costs occurred from 2010-2011, corresponding to the implementation of the Health Information Technology for Economic and Clinical Health (HITECH) Act. The act urged health care organizations to use and implement electronic health records (EHRs), leading to a significant increase in EHR adoption.

Growing health IT adoption may also contribute to IT staff expenses, which have grown steadily year-over-year since 2009.  This suggests that larger IT expenses don’t lead to significant administrative efficiencies.

Additional insights from the report include:

  • Physician-owned, multispecialty practices reported a 15 percent increase in total operating costs per full-time physician in 2015. This outpaces the 10 percent increase in total revenue in 2015.
  • Medicaid represented 14 percent of charges in 2015 for hospital-owned practices vs. only 7 percent for physician-owned groups.
  • Physician-owned, multispecialty practices that were part of an accountable care organization (ACO) enjoyed lower costs and higher total revenue after operating costs in 2015 vs. 2014.
  • Physician-owned specialties had higher total numbers of full-time support staff than hospital-owned practices.

The MGMA is an association for medical practice administrators and executives, providing exclusive member benefits, education, resources, news, information, advocacy, and networking opportunities. The MGMA represents more than 275,000 physicians–more than 46% of U.S. health care.

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