Costs of providing primary care: comparison of an academic general medicine practice with an MGMA benchmark.

Market-based healthcare reform has placed great financial pressures on academic departments of internal medicine. The current emphasis and increased recruiting for primary care have not been accompanied by a financially supportive institutional culture or favorable third-party reimbursement system for the generalist practitioners. In one department's analysis, there was a large difference in revenue (-$130,000) compared to a Medical Group Management Association (MGMA) standard, yet a reduced level of compensation for primary-care physicians, $61,000 less per full-time equivalent (FTE). Total overhead per FTE in our department was $80,000 greater than comparable practices of the MGMA standard. We have estimated the institutional strategic costs of having primary-care clinics in three separate locations in the city of Richmond ($74,000/FTE). No viable cost-cutting options placed the primary-care program in positive balance, but the analysis contributed to a creative institutional approach for a solution.