Practice Environment for Massachusetts Physicians Declines for the 11th Straight Year

Contact: Richard P. Gulla
rgulla@mms.org 
781-434-7101
pager: 877-820-9023

A full copy of the MMS Index report is available at www.massmed.org/mmsindex

Waltham, Mass. -- April 12, 2005 -- The Massachusetts Medical Society (MMS) today released its Physician Practice Environment Index for 2004, and for medical doctors in the Commonwealth the news is still negative. The analysis describes a practice environment for physicians that continues to deteriorate and that has reached another all-time low since the first year of measurement in 1992.

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The MMS Physician Practice Environment Index is a statistical indicator of nine selected factors that shape the overall environment in which physicians provide patient care in Massachusetts. For 2004, six of the nine declined.

The Massachusetts index dropped 1.8 percent for 2004, the 11th consecutive year that the index has fallen since 1993.

The US Physician Practice Environment, a companion index compiled by the Medical Society that reflects the national practice environment, also fell again, at a rate of 2.3 percent, for its ninth consecutive drop. It was only the third time in 11 years that the US index dropped faster than the state index.

"The bad news is that it just keeps dropping," said Alan C. Woodward, M.D., president of the Massachusetts Medical Society, the statewide association of physicians with more than 18,000 members. "But the sad irony is that in a state known throughout the world for its quality of medical care, physicians in Massachusetts continue to work in a practice environment that's worse than the rest of the nation." 

Woodward said the declines in both the Mass. and US indices for 2004 were propelled by the same factor: sharp jumps in the cost of professional liability insurance - the only double-digit jump on both the state (11 percent) and national (16 percent) level of any of the factors that comprise the index. Medical liability reform is a top advocacy priority of the Medical Society.

While the last four years of consecutive double-digit jumps in liability premiums have hit Massachusetts physicians hard, ProMutual Group, the largest commercial insurer in the state, has announced it will hold rates flat for 2005.

"That's welcome relief, although it's likely to be a one-year phenomenon," said Woodward referring to ProMutual's announcement.  "And with the current projection of major cuts in Medicare reimbursements for physician services of at least 5 percent per year over the next 5 years, the practice environment in the state could deteriorate dramatically, since some other insurers tie their reimbursements to Medicare."  

The two other biggest factors dominating the Massachusetts index for 2004 were (1) the ratio of housing costs to physician income; and (2) the number of physicians 55 years of age and older.

The ratio of housing costs to physician income jumped 10 percent last year, more than twice the rate of growth of physician income, which rose just 4 percent.   The number of physicians 55 years of age or older rose 3 percent, continuing a decade-long trend of the aging of the state's physician workforce - an indication of the state's inability to retain and attract younger physicians.

The Physician Practice Environment Index findings on housing costs echo two recent, separate reports from the Greater Boston Chamber of Commerce and the Boston Foundation.  Both reports released last week said the region has some of the nation's highest housing costs, threatening local economic health.

The Medical Society's annual Index and its Physician Workforce Study consistently have found that high housing costs and soaring liability insurance premiums have been some of the biggest obstacles to recruitment and retention of physicians in the state.

Woodward said low reimbursements for services, administrative overload, and increasing costs of operating a practice are putting additional pressure on physicians of all specialties across the state. Citing several sources, the Medical Society has calculated that the cost of operating a practice in the state, reflecting costs of labor, rent, and medical supplies, has risen 63 percent in Massachusetts since 1992, exceeding the national average by nearly 22 percent.    

Economist James M. Howell, Ph.D., president of The Howell Group, which developed the index with the Medical Society, stressed that the rate of decline for Massachusetts continues to be much faster than the country as whole. He said this relentless erosion in the physician practice environment calls for action in three areas.  

"The first step to improvement," said Howell, "is to resolve the medical liability situation, which affects not only physician practices but also patients and entire health care system. The second step is to change the widespread reality and perception that Massachusetts is not an attractive place to practice medicine. This should lead to better recruitment and retention of physicians. And the third step is to somehow address the high cost of doing business in the state - another critical factor underlined by the Chamber and Foundation studies.

"The biggest and most important step to take," said Howell, "is the first. Fixing the medical liability situation will have a huge impact on the other two areas. Only then will the practice environment for physicians begin to improve."

The Massachusetts Medical Society developed the index to measure the impact of nine indicators representing three major factors that influence the practice environment for physicians: 

  • Supply of Physicians, including the number of applications to Massachusetts medical schools, the percentage of physicians over 55, and the number of employment ads in the New England Journal of Medicine;
  • Practice Financial Conditions, including New England median physician income, ratio of housing prices to median physician income, and professional liability costs;
  • Physician Work Environment, including physician cost of maintaining a practice, mean hours per week spent in patient care, annual number of visits per emergency department.
The Massachusetts Medical Society, with some 18,300 physicians and student members, is dedicated to educating and advocating for the patients and physicians of Massachusetts. The Society publishes The New England Journal of Medicine, one of the world's leading medical journals; the Journal Watch family of professional newsletters covering 11 specialties; and AIDS Clinical Care. The Society is also a leader in continuing medical education for health care professionals throughout Massachusetts. Founded in 1781, MMS is the oldest continuously operating medical society in the country.
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