How to Measure the Optimal Physician to Staff Ratio

If you wonder whether you employ too many or too few clinical staff in your medical practice, you’re not alone.  Many physicians share this concern and don’t know how to assess what the right number is for their practice.  Fortunately, there are quantitative measures and recognized procedures to determine optimal staff size that are available.

The Reactionary Approach

In the absence of external metrics, physicians tend to add or reduce staff based on temporary fluctuations in work load or available salary budget.  A sudden increase in new patients, or in existing patient appointments, often leads to new hires.  If on the other hand, if costs unexpectedly increase, the solution is sometimes to let people go.  Neither of these approaches represents a scientific analysis, and neither will produce a long-term solution.

Benchmarking against Industry Standards

Fortunately, a large amount of benchmarking data is available to assist you.  You can find reliable benchmarking data, including those based on specific types of practices, from a number of organizations (for a fee) including:

  • The Medical Group Management Association (MGMA)
  • Practice Support Resources (PSR)
  • The American Medical Association

There are also many local medical groups which have amassed key benchmarking data.

The Most Important Metrics

The two most important benchmarking measurements have to do with the number of clinical staff you employ and the cost to employ them, both of which are expressed as ratios.  Appropriate staffing level is usually expressed as a ratio between number of staff and the number of full-time physicians.  Appropriate salary is usually expressed as total staff compensation divided by gross revenues.  Be sure in making these calculations to closely follow recognized methodologies.

Individual Variation

When you utilize benchmarking data, it’s important to understand that these represent the averages of many practices, and that individual practices vary based on the skills of the individuals who work at, or for a practice.  To adjust the numbers to better reflect the unique characteristics of your practice, pay particular attention to the following factors:

1.      Physician Productivity:  If a physician is highly-productive, the physician to support staff ratio will be affected, and a practice may need more support staff than the benchmarking data suggest.  In assessing relative level of physician productivity, benchmark the number of patients seen per physician per day, along with the number and types of services provided.

2.      NPs and PAs:  Some practices employ nurse practitioners and/or physician assistants; some don’t.  Because these providers offer services similar to those of a physician, practices which employ them are likely to require a larger number of support staff to handle the work they do.  Practices which do not employ NPs and PAs should adjust their support staff needs downward as compared with benchmark averages.

3.      Multiple Practice Locations:  If you have a central office and one or more satellite locations, particularly when these additional offices function semi-autonomously, your staffing needs for those offices will be similar to your central office.  If on the other hand the same doctors move among the several locations, staffing needs at satellite locations will be higher.

4.      Staff Cost: Compare staff costs to gross revenue. If staffing costs as a percentage of revenue appear high, it may be caused by a different problem other than staffing. Here are the most common:

  • Revenue Problem. Low revenues may be caused by (1) slow or ineffective collections, (2) low fee schedules, (3) poorly managed provider contractors, or (4) improper coding. All four areas must be assessed and analyzed periodically to evaluate how effective a practice is in each area.
  • Employee Turnover. New employees are not as productive as experienced staff in a practice. Training time plus the time required to perform tasks will be much greater with new employees versus employees who have been with a practice for several years.

Medical practices are facing increasing pressure to improve productivity and cash flow.  You can enhance your understanding of your practice’s productivity by comparing staffing and salary data against established benchmarks, and by adjusting the numbers based on the unique characteristics of your office.

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