Useful Managed Care Provider, Staffing, Activity and Financial Trends

Part Two

By Dr. David Edward Marcinko MBA


Dr. DEMIf you read this ME-P regularly or have read my earlier blogs, you know that I am writing a book on practice management for the private medical practitioner.

The Business of Medical Practice [Transformational Health 2.0 Skills for Doctors]; third edition:

Link: Front Matter BoMP – 3

A recent story in the Chicago Tribune on the difficult business life of private practitioners today reminds me that I need to keep my nose to the grindstone.

For example, according to the sanofi-aventis Pharmaceutical Company Managed Care Digest Series, for 2008-10, the following patterns and comparative trend information has been empirically determined and may provide a basic starting point for medical practitioners to share business management, facilities, personnel, and records information for enhanced success

Mid-Level Provider and Staffing Trends

  • Mid-level provider use increased among multi-specialty groups, especially in those with more than half of their revenue from capitated contracts. Use also rose with the size of the practice and was highest with OB/GYN groups.
  • Medical support staff for all multi-specialty groups fell and was lowest in medical groups with less than 10 full-time equivalent (FTE) physicians. However, groups with a large amount of capitated revenue actually added support staff. Smaller groups limited support staff.
  • Compensation costs of support staff increased and the percentages of total operating costs associated with laboratories, professional liability insurance, IT services, and imaging also increased. Support staff costs increase with capitation levels and more than half of all operating costs are tied to support staff endeavors.

Managed Care Activity and Contracting Trends

  • More medical group practices are likely to own interests in preferred provider organizations (PPOs) than in HMOs and the percentages of groups with managed care revenue continues to rise. Multi-specialty and large groups also derive more revenue from MCOs than single specialty or smaller groups.
  • Managed care has little effect on physician payment methods that are still predominantly based on productivity. Physicians were paid differently for at-risk managed care contracts in only a small percentage of cases.
  • Most medical groups (75%) participating in managed care medicine have PPO contracts. Group practices contract with network HMOs more often than solo practices. Single-specialty groups more often have PPO contracts.
  • Capitated lives often raise capitation revenues in large group practices. Group practices are more highly capitated than smaller groups or solo practices. Almost 30% of highly capitated medical groups have more than 15 contracts and 22% have globally capitated contracts.
  • Higher capitation is linked with increased risk contracting. Larger groups have more risk contracting than smaller groups.

Physician Health

Financial Profile Trends

  • Medicare fee-for-service reimbursement is decreasing. Highly capitated groups incur high consulting fees.
  • The share of total gross charges for OB/GYN groups associated with managed care at-risk contracts is rising while non-managed care, or not-at-risk charges are declining.
  • Capitated contracts have little effect on the amount of on-site office non-surgical work. Off-site surgeries are most common for surgery groups, not medical groups.
  • Half of all charges are for on-site non-surgical procedures.
  • Highly capitated medical groups have higher operating costs and lower net profits.
  • Groups without capitation have higher laboratory expenses than those who do.
  • Physician costs are highest in orthopedic surgery group practices. Generally, median costs at most specialty levels are rising and profits shrinking.


Obviously, the above information is only a gauge since regional differences, and certain medical sub-specialty practices and carve-outs, do exist.

Part One: Useful Managed Care Patterns and Procedural Utilization Trends


Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact:


Product DetailsProduct DetailsProduct Details

Product Details  Product Details

   Product Details 

%d bloggers like this: