MGMA Report Finds Costs Surpass Revenue Growth for Orthopedic Medical Group Practices

ENGLEWOOD, Colo. -- Operating costs for orthopedic medical group practices of all sizes rose faster than median total medical revenue from 2001 to 2003, according to the newly-released Medical Group Management Association (MGMA)’s “Cost Survey for Orthopedic Practices: 2004 Report Based on 2003 Data.” Practices also faced different challenges -- and reaped different rewards -- depending on whether they owned a stake in, or total control of, ambulatory surgery centers (ASCs).

As a whole, median total medical revenue grew by 14.8 percent for all orthopedic practices from 2001 to 2003. Mid-sized practices (seven to 12 full-time-equivalent physicians) and large practices (13 or more FTE physicians) experienced the largest revenue increases - 13.4 percent and 13 percent, respectively. Small practices (six or fewer FTE physicians) experienced 8.8 percent growth.

Growth in operating costs dampened those numbers. Small groups endured a 17.3 percent spike in operating costs. Mid-sized groups' costs grew 18.9 percent, and large practices experienced 23.5 percent growth.

Marilyn Orr, MBA, CMPE, MGMA’s government affairs committee member and administrator of Dover Orthopedic Center Inc. in Dover, Ohio, attributes rising costs to familiar factors: "The Medicare fee schedule doesn't keep pace with salary and employee benefit costs, and malpractice insurance is going up."

Practices with wholly owned ASCs, and those that own a stake in them, experienced 14.3 percent and 23.9 percent growth in median total medical revenue, respectively, during the three-year period. Cost growth outpaced revenue growth, though practices that own ASCs experienced a 37.2 percent increase and those without a wholly owned ASC experienced a 24.2 percent increase.

The ancillary services that brought in the biggest revenues for those orthopedic practices that offered them in 2003 were diagnostic radiology, magnetic resonance imaging and physical therapy.

Source: MGMA