MMS Index Highlights Deteriorating Practice Environment
By Frank Fortin

A new statistical tool developed by the MMS has confirmed that physician practices have been struggling in a sharply deteriorating operating environment since the mid-1990s.

The semi-annual MMS Index, developed by former Bank of Boston economist James M. Howell, Ph.D., found that the quality of the physician practice environment has declined for seven consecutive years, including a sharp 7.2 percent decline in 2000. From 1992 to 2000, the index declined 20.3 percent.

Francis X. Rockett, M.D., MMS president, said the index is important because it highlights the stresses affecting the ability of practices to deliver care. "The physician practice is a critical cornerstone in our health care system," he said. "It is the focal point of the doctor-patient relationship and where most people enter into the health care system. If physicians can't afford to run their practices, or if there aren't enough doctors to support an area's patient needs, access to quality health care is seriously compromised."

The index measures individual indicators that represent three important factors affecting the quality of the practice environment: the supply of physicians, practice financial conditions, and physicians' work environment.

According to Dr. Howell, the variables selected statistically capture the overall environment in which physicians practice. They also represent distinctly different aspects of the practice and are collected from a diverse group of eight different data sources. They are "intuitively acceptable" performance variables for the physician, policymaker and researcher, he said.

Decline Accelerates
Dr. Howell pointed out that the index highlights two distinct periods for practices during the 1990s. In the early part of the decade the decline was relatively shallow, averaging 1.5 percent a year. In the late 1990s, the decline accelerated to an annual rate of 4.6 percent.

What caused this acceleration? Principally, five variables: sharply increasing costs to operate a professional practice (up 23 percent from 1997 to 2000); increased housing costs (up 44 percent); more job openings, advertised in The New England Journal of Medicine (up 65 percent); higher malpractice insurance costs (up 16 percent) and fewer medical school applicants (down 20 percent).

Other variables measured were the number of physicians over age 55, physician income, patient care hours, and emergency department utilization.

Snapshot of the Environment
Economic indices are frequently used to develop statistically rigorous snapshots of the vitality of economic sectors. Perhaps the best-known index is the Index of Leading Economic Indicators, which is used to predict the future performance of the national economy. There are similar indices for the New England economy, and for the travel industry, which Dr. Howell develops.

While the MMS Index looks back at recent performance, not forward, Dr. Howell said it is useful to "periodically see what factors are working positively and negatively on physicians. As such, the general environment for the physician practice can be quantified much like other economic indicators are measured."

Dr. Rockett commented, "While the decline in the index is alarming, it's taken a long time to come to this point. With this index, we have now identified the difficult environment confronting our physicians, and how it affects patients. Now we will proceed to work on alleviating those pains."

The next MMS Index is scheduled for release in early 2002.