ENGLEWOOD, CO – Revenue in medical practices declined in 2008, according to the Medical Group Management Association.

The drop may be tied to smaller patient volumes and increasing bad debt due to patients’ financial hardship, according to the association. Medical practices responded by trimming overhead costs, but not enough to accommodate shrinking revenues.

According to the MGMA’s "Cost Survey: 2009 Reports Based on 2008 Data," multi-specialty group practices saw a 1.9 percent decrease in total medical revenue in 2008.

“These data demonstrate the trickle-down effect that a tough economy can have on a collection of businesses that are already stressed by crushing administrative burdens,” said William F. Jessee, MD, the association's president and CEO. “Even in a good economy, many of our member practices have trouble staying financially solvent, so now it’s more important than ever that practices look for ways to operate as efficiently and effectively as possible.”

Each medical specialty’s cost and revenue drivers are unique, but falling revenues may be attributable to a decline in patient volume, indicated by a 9.9 percent drop in the number of procedures and an 11.3 percent slump in the number of patients from 2006-08.

Bad debt in multi-specialty group practices from fee-for-service charges also increased 13 percent from 2006-08, suggesting that patients may be having a harder time paying their medical bills.

According to the study, total operating costs increased 54 percent in multi-specialty group practices in the past 10 years, while total medical revenues increased 46 percent. Overall cost increases were due to a variety of factors, including increases in drug supply costs, support staff costs and professional liability fees.

The survey also revealed trends distinct to specialty practices. OB/GYN and gastroenterology practices experienced decreases in total medical revenue after operating costs. Cardiology, family practice, anesthesiology, pediatrics, orthopedic surgery and urology groups fared better, reporting increases.

This year’s Cost Survey Report contains data on 33,000 providers, the largest provider population of any cost survey report in the United States, according to the MGMA.