Finding the Financial Margin Expansion Leverage in the Medical Practice

Abstract

All U.S. medical groups, especially the independents, are under financial pressure from third-party payers, both commercial and governmental. These pressures come in the form of unit price controls, services utilization constraints, and total costs of care oversight, especially for the management of chronic conditions. The only solution to the deterioration of practice operating economics and related financial performance is operating margin expansion strategies—the expansion of the margin that funds the provider compensation pool. Such strategies are available. The principal challenges to margin expansion often are products of entrenched, and frequently intractable, clinical models and related business models, together with facility constraints, and access to investment capital that doesn’t excessively draw down physician compensation.