Twice as many physicians expect their profits to decline in 2014 than expect to see them rise, according to the 2014 Practice Profitability Index, a national survey of more than 5,000 physicians.
The survey revealed four reasons physicians have an increasingly negative outlook for their finances this year.
1. Declining reimbursements and rising costs. As the entire healthcare industry looks to cut costs, 60 percent of physicians surveyed pointed to reduced reimbursements from payers as a major factor on their profitability. Similarly, 50 percent pointed to rising costs for everything from medical supplies to staff salaries as putting a squeeze on their profits.
2. Healthcare reform. About half (49 percent) of physicians surveyed pointed to the Patient Protection and Affordable Care Act and its regulatory requirements as detrimental to their practices' profitability.
The influx of new patients into the healthcare system under the PPACA will not necessarily help profitability — many practices (47 percent) said they will not be able to accept new PPACA patients. Additionally, new regulatory requirements have increased the amount of time physicians spend on documentation and administrative work. Nearly one-quarter (23 percent) of physicians surveyed said they now spend more than 40 percent of their time on administration, up from 15 percent in last year's survey.
"The 2014 PPI results show that physicians are experiencing increasing strain on their practice operations as a result of healthcare reform and government mandates," said Albert Santalo, chairman and CEO of CareCloud, one of the survey's founders, in a news release. "This strain, in turn, affects patients — including the millions of new ones entering the system as a result of the PPACA."
3. ICD-10 transition. The ICD-10 transition was recently delayed from Oct. 1, 2014 to Oct. 1, 2015, giving physicians more time to prepare. However, the transition still comes with a hefty price tag in terms of new software and staff training, and the delay has forced some physicians to alter their preparation timelines, an often costly endeavor.
Additionally, the survey found less than 30 percent of physicians surveyed to be confident about being prepared by next year, meaning more money will likely have to be spent this year to keep physicians from losing out on reimbursements in 2015.
4. EHR adoption/meaningful use. Physicians are also under pressure to adopt electronic health records if they have not done so to receive meaningful use incentive funds and avoid penalties, or move on to meaningful use stage 2 if they have completed two years of stage 1. However, stage 2 has proved very difficult to obtain — just 50 eligible professionals have attested to stage 2 so far, according to CMS. Meeting these requirements involves capital outlays for software upgrades and staff training, or purchasing a replacement EHR system for the 10 percent of surveyed physicians who said their vendor was not 2014 Edition-certified.
All of these factors have physicians increasingly willing to be bought by a hospital or delivery system. A majority still wish to remain independent, but the percentage dropped from 60 percent in the 2013 survey to 53 percent in the 2014 survey. Similarly, the percent of practices that reported they were interested in selling increased from 21 percent to 24 percent.
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