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Tom Flatt
(703) 838-0033 ext. 328
tflatt@amga.org

2 September 2008

2007 Medical Group Data Finds Financial Losses in Most Regions, Modest Increases in Physician Compensation for Most Specialties
Despite Improvements in Some Areas, Provider Organizations Still Face Mounting Losses

ALEXANDRIA, VA - According to findings in the American Medical Group Association’s 2008 Medical Group Compensation and Financial Survey, most specialties saw modest increases in compensation in 2007, but many provider organizations continue to operate at a significant loss.

The survey found that 91% of the specialties experienced increases in compensation in 2007, with the overall average increase around 3.5% (slightly less than 2006, when 92% experienced an average increase around 4.8%). The primary care specialties (excluding hospitalists) saw about a 3.2% increase in 2007, while other medical and surgical specialties averaged around 3.7%. (The primary care specialties saw about a 4% increase in 2006, while other medical and surgical specialties averaged around 6%). The survey reports that during 2007 the specialties experiencing the largest increases in compensation were dermatology (8.97%), cardiac/thoracic surgery (8.11%), hematology and medical oncology (7.66%), pathology (7.38%), and hospitalists (7.32%). Interestingly, cardiac/thoracic surgery saw one of the largest decreases in compensation in 2006 (-2.13%).

“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.”

The section of the survey that examines financial operations found that medical groups were operating at an average loss of $4,728 per physician (median performance per physician), reflecting a major overall downturn from 2006 (-$119 per physician). Again in 2007, on average, only organizations in the Western region were operating at a profit ($4,453 per physician), though profits were significantly down (from $17,317 per physician in 2006). Organizations in the Southern region, which saw significant losses in 2006 (-$6,049 per physician), saw improvements, though they continued to operate as a loss (-$1,919 per physician). Groups in the Eastern (-5,744 per physician) and Northern (-$5,322 per physician) regions saw an erosion of modest gains achieved in 2006 (-$3,727 and -$2,944 per physician, respectively).

“In the face of the current economic climate, these medical groups continue to rise 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 are now experiencing 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.”

The AMGA 2008 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 44,200 healthcare providers throughout the United States, including 116 specialties, 27 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. Additionally, a special section examines the impact of 2007 CMS work RVU changes. The 21st annual AMGA compensation and financial survey was conducted by the national accounting firm of RSM McGladrey, Inc.

AMGA is an association that represents medical groups, including some of the nation’s largest, most prestigious organized systems of care. AMGA advocates for multispecialty medical groups and other organized systems of care, and for the patients served by these systems, by continuously striving to improve patient care through innovation, information sharing, benchmarking, the creation of sound public policy, and leadership development. The members of AMGA deliver health care to more than 80 million patients in 47 states, including 15 million capitated lives. The average AMGA member group has 275 physicians and 18 satellite locations. 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, publications, benchmarking data services, and financial and operations assistance.

A limited number of copies of this year’s survey are available for working press. For press copies, contact Tom Flatt at tflatt@amga.org. Surveys are also available for purchase for $275 to AMGA members and $550 to nonmembers. To order, click here or contact Stefan Rozga at (703) 838-0033, ext. 326.

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