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AAAAI News: November 2007

Results of the 2007 Practice Management Survey
by Marshall Grodofsky, MD, Practice Management Committee, Chair

The AAAAI's Practice Management Committee has again created a "financial data survey" to allow the organization a tool to collect and evaluate specific data that would allow our membership to gain an understanding of general trends in the productivity and efficiency of allergists. The committee hopes that this ongoing annual survey will allow us to develop benchmarks that could be used for comparison by members in evaluating their own business performance. Also, the surveys will allow us to follow trends in how our respondents utilize staff in their offices.

The data was solicited through the AAAAI Web site between March 1 and August 31, 2007, regarding tax year 2006 data. We asked questions about practice demographics (regional location and number of physicians in the practice), actual charges, collections, expenses and staffing data. This year we also asked specifically about expenses related to "marketing," and about participation in pharmaceutical company clinical trials. There was a larger response than last year with 111 practices representing a total of 267 physicians (compared to the 74 responses representing 196 physicians a year ago). Again, there were a significant number of practices who elected not to share the specifics of their charges and collection information, and there were some data entry errors that occurred that invalidated some data provided. However, 89 practices of various size and locations provided us with useable data representing 210 allergists. This is the largest sampling of any other financial information survey of its kind.

Confidentiality of the data entries were assured by limiting review of the individual data reported to a minimal number of individuals. Only Carmella Canada of the AAAAI executive office and the committee Chairman viewed the individual data entries. The membership ID and password needed to enter the area of the Web site to enroll in the survey was a computer automated entry surveillance mechanism. Therefore, names were never linked to the data recorded for review. The data on practice charges, collections and expenses were divided by number of physicians in each practice to get a "per physician" measurement for each variable evaluated. The "profit per physician" data was calculated by subtracting "collections per physician values" by the "expenses per physician" values (with the questionnaire clearly advising respondents not to include expenses that might be considered physician reimbursement, such as retirement plan contribution for physicians or health insurance premiums). All data was later subdivided considering different practice variables, such as regional location, solo versus group practices and practices employing physician extenders or practices participating in clinical trials.

Results:
111 practices resenting 267 physicians for the demographic data; for the financial productivity, 89 practices representing 210 physicians provided data that could be analyzed.

Demographic Data:
56 of the 111 practices were solo practices. 43 of the 111 practices employ physician extenders (15 of those practices employ multiple extenders) with 18 of the solo practices included in that grouping.

Work Hours:
522 of the 111 practices report having Saturday hours (none report Sunday hours). 37 of the 111 practices report starting patient hours prior to 8 am, an average of 2.24 + 1.38 days per week.

56 of 111 practices report working "evening hours," but 80 practices total report extending patients hours past 5 pm, 2.2 + 1.095 days per week.

Participation in Clinical Trials:
50 of the 111 practices report participation in these trials.

Immunotherapy Administration:
MDs provide therapy in 26.2% of the practices; RNs used in 67.3%; LPNs used in 54.2%; Medical Assistants or Technicians provide therapy in 41.1% of responding practices; PAs used to provide therapy in 3.7% of practices responding.

Employed Administration Staff:
36.5% of practices report employing a "Practice Administrator," with 61.5% reporting employing an "Office Manager." 18.7% of practices report hiring both these positions. 47.1% of practices report having a "Head Nurse" or Clinical Supervisor; 20.2% employ an "Asthma Educator"; 57.7% employ a "Billing Supervisor"; 41% of practices employ a "Bookkeeper".

FINANCIAL PRODUCTIVITY DATA

Total Charges Per Physician:
Median result: $997,564/ physician. Mean : $1,177,324/ physician + $690,973 with a range between $200,000 and $3,36,073.

Total Collections Per Physician:
Median result: $736,930 / physician. Mean : $819,860/ physician + $463,439 with a range between $130,000 and $2,597,020

Collection Ratio (Collections/Charges):
Mean : 70.022% + 13.025%

Expenses Per Physician:
Median result: $420,000 / physician. Mean : $466,168 / physician + 256,589 with a range between $60,000 and $1,000,000

Expense Ratio (Total Expenses/Total Collections):
Mean : 56.342% + 14.217%. Median: 57.692%.

Profit Per Physician:
Median result: $319,717 / physician. Mean: $351,984 / physician + $198,042 with a range between $46,000 and $1,000,000.

Regional Breakdown:
Comparing Northeast (25 practices with 46), West (9 practices with 20 physicians), Rocky Mt./Central (16 practices with 54 physicians), Mid-East states (16 practices with 32 physicians), to South (23 practices with 58 physicians):

Mean Collections:
NE: $700,298; West: $859,189; Central: $983,850; Mid-East: $796,532; South: $854,265.

Mean Expenses:
NE: $420,454; West: $358,112; Central: $600,889; Mid-East: $434,896; South: $510,402.

Mean Profit/Physician:
NE: $374,122; West: $283,848; Central: $327,590; Mid-East: $361,636; South: $363,744.

% of Immunotherapy Codes Compared to Total Billing:
Mean of 34.9% + 15.7%. Median results of 35.0%.

Percentage of Marketing Expenditures of Total Practice Expenses:
75 of 89 practices gave values for both total practice expenses, and amount spent on marking. Median result: 0.9131%; Mean: 1.6879 + 2.0137%. Range between 0 and 8.3333% total expenditures.

Solo versus Group Practice Results:
50 solo practices versus 21 group practices with 2 to 3 physicians (representing 47 physicians), compared to 18 group practices with 4 or more physicians (113 physicians)
Median Collections/Physician: Solo: $692,551; Group 2 & 3: $675,000; Group > 4: $874,060.
Mean : Solo: $804,986; Group 2 & 3: $643,826; Group > 4: $1,058,601.
Median Expenses /Physician: Solo: $400,000; Group 2 & 3: $365,544; Group > 4: $517,446.
Mean : Solo: $469,028; Group 2 & 3: $355,371; Group > 4: $576,726.
Median Profit/Physician: Solo: $300,000; Group 2 & 3: $274,891; Group > 4: $403,342.
Mean : Solo: $354,063; Group 2 & 3: $301,390; Group > 4: $404,012.

Practices Employing Physician Extenders:
36 of the 89 practices that were analyzed employ physician extenders. Median result profit per physician in practices with extenders was $351,718, compared to $279,000 in practices without extenders.

Analysis:
Compared to the results reported last year allergy practices reported an 15% increase in profitability with a mean "profit per physician" this year up to $351,984 compared to $306,666 calculated on the 2006 survey. This increase was an apparent result from a greater increase in collections (increase of 17.5 % from 2006 data) than by any decreasing expenses (which showed only a 13.5% increase from 2006 data).

This year, because of an increase in responses, we were able to divide out group practices with only 2 or 3 physicians, and compared those figures with solo practices and larger groups. Again this year the larger groups appear to be more profitable because of increased production, and not due to "economy of scale." These practices have higher "expenses per physician on average. The small groups proved to be less profitable than solo practices, but they do demonstrate lower "expense per physician." Lastly, the data again clearly demonstrates economic benefit of hiring physician extenders.

In conclusion, the committee membership feels this exercise allows the AAAAI to collect data that can be used by all allergists in helping to determine trends in practice productivity, and hopes to continue this annual process of the Practice Management Survey. Future questions to be addressed will include determining if Ear, Nose and Throat surgeons are completing this survey, and we will look more closely into determining the hours worked in seeing patients by having the physicians filling out the surveys.

Please click here to view slides that show the complete survey results. Visit the Members Center and choose the Practice Management Resources link. Questions regarding the data or survey methods may be directed to Carmella Canada at the AAAAI executive office at (414) 272-6071, or e-mail ccanada@aaaai.org.

 

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