Healthcare Revenue Higher for Practices Employing More NPs, PAs

Primary care practices with a non-physician provider to physician ratio of 0.41 or greater earned over $100,000 more in healthcare revenue, MGMA found.

Primary care practices that employ more physician assistants, nurse practitioners, and other non-physician providers have greater healthcare revenue and productivity, the Medical Group Management Association (MGMA) recently reported.

In its 2018 MGMA DataDive Cost and Revenue report, the industry group found that practices with a non-physician provider to physician ratio of 0.41 or greater reported higher expenses. However, the practices also had more revenue after operating costs compared to practices with provider ratios of 0.20 or lower.

The comparative data from more than 3,000 organizations showed that physician-owned primary care practices earned about $100,749 more in healthcare revenue after operating expenses per physician by utilizing more non-physician providers.

MGMA also observed greater healthcare revenue for hospital-owned primary care practices that employed a higher number of physician assistants, nurse practitioners, and other non-physician providers.

The practices earned $131,770 more in revenue after operating expenses per physician compared to hospital-owned practices with fewer non-physician providers.

“In the face of a growing physician shortage in the United States, and as MGMA discovered through several other DataDive datasets, American medical practices continue to rely more and more on non-physician providers to treat their patients,” stated Dr. Halee Fischer-Wright, MGMA’s President and CEO.

“Today’s findings not only further demonstrate this trend, but show that by utilizing more non-physician providers in their practice, administrators can actually boost their practices’ revenue and productivity by allowing physicians to focus on the most acute cases.”

Additionally, the data revealed that primary care practices are seeing their expenses increase. Median operating costs for practices grew 13 percent since 2013, increasing from $391,798 per physician to $441,559 per physician.

The findings support a recent MGMA Stat poll that found 69 percent of respondents experienced overhead costs increase in the past year.

The data showed that evergreen costs continue to be a challenge when it comes to operating expenses. General operating costs make up 32 cents of every dollar collected in physician-owned practices, MGMA reported.

Of the general operating costs, health IT accounted for two cents, drug supply six cents, and building occupancy six cents.

Leveraging the productivity and support of physician assistants, nurse practitioners, and other non-physician providers could help medical practices overcome the growing burden of higher operating expenses.

“Because these non-physician providers can effectively compliment primary care services for the organization, access to care increases. Ultimately, both the number of patient encounters as well as their satisfaction can increase,” explained Ken Hertz, Principal Consultant at MGMA. “This is a win-win for both patients and practices – patients’ health outcomes improve while practice revenue increases.”

However, scope of practice laws restricting the care that can be provided by physician assistants, nurse practitioners, and the like may hinder medical practices from realizing the financial benefits of employing more non-physician providers.

Each state has its own scope of practice laws that dictate the degree of independent practice allowed for non-physician providers. The laws range from no requirements at all to collaborative or consultative arrangements with physicians or physician supervisory requirements.

State laws are trending to more independent practice, the Hamilton Project recently reported.

However, the economic research group within the Brookings Institution found that restrictive scope of practice laws are still preventing practices from seeing the productivity and financial advantages of using non-physician providers to support physicians.

“Achieving productivity gains is one way to reduce cost pressures throughout the healthcare system and, ultimately, in government budgets. Productivity can be increased by using different combinations of labor and capital, as well as by using lower-cost sources of labor to achieve the same or better outcomes,” the research group wrote.

“Indeed, relatively high payment rates for physicians in the United States versus other developed countries make this a particularly appealing opportunity,” the group continued. “The lack of normal competitive forces in the healthcare sector, however, serves as a key barrier to achieving these efficiency gains. Currently, there are strong anticompetitive barriers to making more use of advanced practice providers in the healthcare sector.”

But change may be in store for some states. Illinois recently changed its laws to allow healthcare facilities to hire more physician assistants. The state now permits doctors to work with up to seven physician assistants, rather than five.

The Hamilton Project advised healthcare stakeholders to push their state lawmakers to implement similar changes. Specifically, the group called on stakeholders to demand more relaxed scope of practice laws to help practices see the financial and clinical benefits of employing non-physician providers.

The research group also intends for broader scope of practice laws to help resolve the physician shortage, which the Association of American Medical College projects to reach up to 120,000 doctors by 2030.