Pediatric groups' revenue increase falls behind boost in practice costs

Revenue in pediatric medical practices has not kept pace with cost increases, according to the Medical Group Management Association Survey for Pediatric Practices: 2004 Report Based on 2003 Data.

Groups with nine or more physicians report greater revenue per doctor than smaller practices.

The large groups reported revenue, after operating costs, of $226,489 per full-time equivalent (FTE) physician. Smaller groups can't take advantage of economies of scale and staffing efficiencies, suggests Nancy Babbitt, a practice administrator at Roswell Pediatric Center in Alpharetta, Ga.

"Larger practices can also afford to employ a board-certified administrator. This may help those groups negotiate better rates, provide benchmarks for the practice in comparison with its peers, run the practice more efficiently, and capture more revenue," says Babbitt.

Overall, pediatric physician groups reported a 10.3 percent increase in revenue, but a 12.5 percent increase in total operating costs over five years. To offset costs, 16.6 percent of groups charge patients administrative fees to complete forms.

"Malpractice insurance increases and stagnating or decreasing payments are just two factors pushing pediatric and primary care groups' margins to untenable lows," says Babbitt.

Source: Medical Group Management Association Cost Survey for Pediatric Practices: 2004 Report Based on 2003 Data.

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