Survey: IT Expenses per Physician Continue to Rise to Nearly $19,000

Information technology (IT) expenses for physician practices are on a slow and steady rise for most practices, and last year, physician-owned practices spent between nearly $2,000 to $4,000 more per FTE physician on IT operating expenses than they did the prior year, according to a recent Medical Group Management Association (MGMA) survey.

The 2017 MGMA DataDive Cost and Revenue Survey today revealed that IT expenses per physician each year has increased $2,000 to $4,000 over the last year, leaving total IT expenses per physician between $14,000 to $19,000, dependent upon specialty. The MGMA survey is based on comparative data of more than 2,900 organizations and 40 specialties and practice types.

The survey results indicate that the increase is less for hospital-owned practices. These expenses include the cost of purchased IT services such as the maintenance of electronic health records (EHRs) and patient portals, as well as any contracted expenses for the repair of practice hardware and software needs.

The study also showed key factors in profitability and productivity reside in the utilization of non-physician providers and key support staff, as well as payer mix and drug costs.

Between 2015 and 2016, practice operating expenses increased at nearly the same rate as revenue. The practices that came out with increased revenues owe it namely to increased non-physician providers and support staff. Practices with more support staff per FTE physician not only report having higher levels of revenue, but also have increased productivity. Across all specialties, the difference is one to three more support staff per FTE physician in physician-owned practices than in hospital-owned.

The survey also found that payer mix has an impact on costs for medical groups. Primary care practices with a lower percent of government payer mix report having higher operating costs and even higher revenue after operating cost per FTE physician in both physician-owned and hospital-owned practices. Within the physician-owned primary care groups, those with a mix of 30 percent or less, yield $159,307 more in revenue per physician than those with a mix of 50 percent or more. In hospital-owned practices that difference is $221,497.

Additionally, the survey results indicate that drug supply costs continue to rise. From 2015 to 2016, drug supply expenses increased by more than 10 percent per FTE physician: 11 percent for nonsurgical specialty, just over 11 percent for primary care and more than 16.5 percent for multispecialty practices. The largest increases in drug supply costs over the last five years have been reported for multispecialty practices at an increase of 53 percent more per FTE physician and 87 percent more per FTE physician in primary care practices.