By Tom Walsh

Some data in 2002 MMS Index has been revised to reflect new statistical information that has been released by primary sources.

Driven by an average 12.5 percent increase in professional liability insurance premiums, as well as other high costs of living, the MMS Physician Practice Environment Index declined 3.9 percent in 2002. The new index does not include the upcoming 20 percent professional liability premium rate increase filed by ProMutual for July 1, 2003. It was the ninth consecutive yearly decline since 1993 for the MMS Index, a statistical measurement of the environment in which physicians practice.

"The most important conclusion to be derived from these data are that maintaining a physician's practice in today's environment can be extremely difficult," the MMS Index report stated. "In Massachusetts, this results from a combination of increases in business costs as well as professional liability fees."

The MMS Index report also found that the physician practice environment continued to decline nationally. However, the 1.5 percent slide across the country demonstrated that conditions for physician practices in Massachusetts are worsening more quickly than in most other places in the country.

MMS President Thomas E. Sullivan, M.D., said the combination of findings from the MMS Workforce Study released in April, and the Index findings, released a month later, describe the predicament faced by Massachusetts physicians all too vividly.

"It's very grim," Dr. Sullivan said. "We're trying to focus on areas where we can make progress, but we keep getting hit with these rather severe blows."

James M. Howell, Ph.D., the Boston economist who led the MMS Index study, notes the accelerated pace of decline in Massachusetts is significant. In fact, from 1999 through 2002, the Massachusetts practice environment slipped an average of 4.3 percent per year. Nationally, the decline was an average of 2.5 percent per year for the same period.

Causes for Concern
According to the MMS Index report, three main factors influenced this downward shift: medical school applications, housing prices compared to physician income and professional liability premiums.

The study found that the ratio of housing prices to physician income increased by 7.9 percent, while Massachusetts medical schools applications dropped by 9.2 percent last year. Also during 2002, professional liability premiums paid by Massachusetts doctors increased by 12.5 percent, while the average increase for the rest of the country was 9 percent.

"The recent increases in professional liability fees are taking their toll," the MMS Index report found.

The report also stated that a physician's cost of maintaining a practice in Massachusetts is significantly higher than comparable costs for the country as a whole. From 1992 to 2002, the cost of maintaining a physician practice in Massachusetts has increased by 57.7 percent, not including professional liability premium increases. For the entire United States, the practice cost increase was 28.4 percent.

For the same period, professional liability premiums paid by Massachusetts doctors increased by 74.3 percent, while the average increase for the rest of the country was 68.3 percent.

Dr. Sullivan said the Workforce Study and MMS Index reports are discouraging. "It gets harder to find good news," he said. The MMS president said the work to improve the practice environment for physicians must continue. As an example, he cited a "round table" that the MMS has organized with Massachusetts payers to discuss ways to reduce the complexities of running a physician's office. "We hope to find more concrete ways to ease office administration," Dr. Sullivan said.