Hey, check out frequent Chip’s Blog poster Brandon Bettancourt making a splash on the AMA WWW site in a piece about chosing a PM system during this age of EHR purchasing. I have to say that I can’t argue with the list of questions everyone should ask any potential PM vendor.
Meanwhile, back with some data. One assumption made by many is that larger practices make more money per provider – not necessarily true, as I have pointed out before. In fact, I think that practices who merge (vs. grow organically) make less money.
Although the graph below doesn’t address the cost side of the balance sheet, it provides interesting detail about the earning potential of pediatric practices. To summarize: there is a slight negative correlation between the size of a practice and the expected income per physician. In other words, our smaller clients earn more $$. More about that in a second.
I deliberately left off the values on the axes so that an extra-curious reader can’t figure out information about some of our clients. And, I removed from the image a few outliers who would have been easy to identify (namely, the larger practices). But as you climb the Y axis, you are looking at larger practices. As you extend on the X axis, you are looking at physicians generating more revenue.
The implication here is that larger practices don’t generate more income per pediatrician. And, as a rule, they don’t. To test my theory, I ran a similar analysis comparing practice size and patient volume – it looks nearly identical. Smaller practices are also busier. What a surprise.
So unless there is some magic on the accounts payable side of the equation for larger practices (which there is…sometimes good, sometimes bad), smaller practices generate just as much revenue as larger practices on a per-provider basis.
What do you say about that?