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Relative value units drop slightly for hospital-owned practices

An MGMA survey also finds that physicians in independent settings are seeing expenses rise more quickly.

By Victoria Stagg Elliott — Posted Nov. 5, 2010

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Physicians in multispecialty practices owned by hospitals or integrated delivery systems experienced a small decline in total relative value units per patient, while those in independent practices saw a modest increase.

Meanwhile, expenses grew for both, but more quickly for those in independent settings, according to a report and accompanying statement issued Sept. 28 by the Medical Group Management Assn.

A statement issued in conjunction with the "Cost Survey for Multispecialty Practices: 2010 Report Based on 2009 Data" noted that independent physicians reported an increase in total RVUs per patient of 0.09% during the past five years. Work RVUs grew by 13% per patient. Groups owned by hospitals or integrated delivery systems experienced a decline in total RVUs by 0.6%, and a 17.9% decrease in work RVUs per patient.

An RVU is a nonmonetary standard that measures the value of a physician service. Work RVUs refer to the value of any medical services, while total RVUs also account for physicians' practice and liability expenses. MGMA uses its RVU surveys to highlight trends in physician productivity.

The Centers for Medicare & Medicaid Services sets RVUs, which are adjusted for a physician's geographic location, then multiplied by a monetary factor to determine a doctor's payment for a service. Private insurers generally use RVUs as the basis of their payment calculations as well.

MGMA said the RVU numbers show that independent physicians have to work longer hours than their hospital-based colleagues to keep their practices economically viable -- and could explain why so many physicians are motivated to sell their practices to hospitals or larger entities.

"Running a medical practice is very complex, and physicians are seeing that a lot of things are going to shift," said Kenneth Hertz, a principal in MGMA's health care consulting group.

Between 1999 and 2009, median total operating cost as a percentage of total medical revenue increased by 3.2% for independent multispecialty practices, while that number went down 1% for hospital-owned practices, according to the MGMA survey.

Hertz said tight budget controls and the deployment of electronic medical records have helped hospital-owned practices keep expenses down. He said EMRs are a factor as well in independent practices' comparative lack of efficiency.

Independent practices, many of which are now only beginning to implement EMRs, still tend to be in the stage where they are paying larger up-front costs for technology and seeing a loss of efficiency as their practices adjust to its use, Hertz said.

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