Survey: Health Care IT Costs Top $32,500 Per Physician

Technology transition is becoming increasingly expensive, group says

Health care organizations in the United States continue to grapple with significant increases in information technology (IT) costs, according to new data from the Medical Group Management Association (MGMA). The MGMA found that physician-owned multispecialty practices spent more than $32,500 per full-time physician on IT equipment, staff, maintenance, and other related expenses in 2015. 

The findings come from a cost survey conducted by the MGMA among health care organizations in the U.S.

“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, MD, MMM, FAAP, CMPE, president and CEO of the MGMA. “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.”

Since 2009, technology costs at physician-owned multispecialty practices have increased by more than 40%, the MGMA data show. The largest increase in technology costs occurred between 2010 and 2011, corresponding to implementation of the 2009 Health Information Technology for Economic and Clinical Health (HITECH) Act, which incentivized physicians and others to use certified electronic health records (EHRs). The HITECH incentives led to a significant increase in the number of organizations adopting IT systems. However, these incentives tapered down significantly after 2011, requiring practices to shoulder a larger percentage of the cost to upgrade and maintain the technology, according to MGMA.

The growing adoption and complexity of healthcare IT may have also contributed to the growing IT staff expenses practices have experienced in recent years, the group says. Physician-owned multispecialty practices have seen steady year-over-year increases in IT staff expenses, which have escalated by nearly 47% per full-time physician since 2009. Increased staff costs suggest that larger investments in technology have yet to result in significant administrative efficiencies for practices, the survey found.

Other trends in the health care industry also may have contributed to increased technology costs. For example, many practices have invested in online patient portals that allow patients to view their personal health information, make payments, or schedule appointments online, among other functions. More than 50% of nearly 850 respondents to the recent MGMA Stat poll reported that patients can request or make appointments via their practice’s patient portal. 

Further, total operating costs are growing throughout the health care industry, putting greater pressure on practices as they move toward providing value-based care. Physician-owned multispecialty practices reported that total operating costs increased by nearly 15% per full-time physician in 2015, according to the MGMA data, outpacing the more than 10% increase in total revenue these practices experienced last year.

Other key findings include

  • Physician-owned multispecialty practices that are part of an accountable care organization (ACO) had lower costs and higher total medical revenue after operating costs in 2015 than in 2014.
  • In 2015, Medicare accounted for a nearly identical share of charges—approximately 33%—at both physician-owned and hospital-owned practices. However, hospital-owned practices reported that Medicaid represented 14% of charges last year, which was more than twice the nearly 7% reported by physician-owned groups.
  • Physician-owned specialties reported having a higher total number of full-time support staff on payroll—including personnel who oversee business operations, the front office, and clinical support— than did their hospital-owned counterparts in 2015. However, primary care specialties at both physician- and hospital-owned practices reported a small decline in total support staff throughout the past two years, whereas nonsurgical and surgical specialties reported support staff increases during that period.

Source: MGMA; August 2016.