Medical Group Revenue Declines Underscore Need for Efficiency

November 17, 2021  by  Allzone MS   295

medical-group-revenue-declines-underscore-need-for-efficiency

The survey found that median provider salary and benefits expense as a percent of net revenue increased from 72.1 percent to 84.9 percent, which is the outcome of provider compensation being protected during the COVID-19 pandemic combined with decreased productivity.

In addition, the survey showed a net revenue decrease from 24.2 percent to 22.8 percent in median clinic staff salary and benefits expense. However, the median total operating expenses increased from 21.7 percent to 29.0 percent.

“We have seen the median provider salary and benefits as a percent of net revenue trending upward in recent years, leaving a smaller percentage of the expense structure to cover staff salaries and benefits and operational expenses,” Rose Wagner, RN, MHS, FACMPE, AMGA consulting chief operating officer, said in a press release. “This situation is not sustainable, and medical groups must focus on ensuring optimal efficiency in practice operations.”

AMGA showed that the overall median profit/investment per provider in 2020 was -$26,290, following a -$22,028 loss in 2019.

Meanwhile, the overall median profit/investment per provider for system-affiliated medical groups decreased from -$163,994 in 2019 to -$135,360 in 2020.

In 2020, the overall median profit/investment per provider for independent medical groups dropped from 2019, with a profit of $12,434 to $$649 in 2020.

The overall median investment per physician in 2020 was -$50,799 from -$32,985 in 2019, showing an increased loss.

The overall median investment per physician for health system-affiliated medical groups went from -$278,505 in 2019 to -$220,207 in 2020.

Independent medical groups also experience a loss in profit/investment per provider as it went from $16,603 in 2019 to $1,127 in 2020.

“Since expenses included and allocation methodologies in the P&L differ from organization to organization, we recommend utilizing a comparative analysis at the expense line item level, and the survey enables such a comparison. This approach points efforts to areas where the medical group is able to control and ultimately impact change,” Fred Horton, MHA, AMGA Consulting president, stated in the release.

The survey’s results found that the overall median annual visits per provider declined in 2020. For example, the median annual visits per provider for all medical groups decreased from 2,480 to 2,332 within one year.

Additionally, system-affiliated medical groups median annual visits per provider decreased from 2,049 in 2019 to 1,471 in 2020.

Independent medical group median annual visits per provider decreased from 2,765 in 2019 to 2606 in 2020.

“APP to physician ratio did decline in 2020 in primary care and medical specialties, most likely due to layoffs and furloughs as a result of COVID-19,” Wagner continued, “Prior to 2020, the APP to physician ratios had been increasing year over year.”

Even though system-affiliated medical groups utilized more advanced practice providers (APP) than independent medical groups, the ratios between the two were almost equal.

In 2020, the median ratio of APPs to physicians was 0.56 for system-affiliated medical groups, 0.57 for the independent medical group, and 0.56 for all medical groups.

“Although 2020 was in the height of the COVID-19 pandemic, many groups adapted during that year and made changes that will remain in place going forward,” Wagner said. “Therefore, the pandemic resulted in many positive operational changes and learnings that medical groups can use to build upon. This survey is a critical tool to understand the financial and operational impact of the pandemic on medical groups.”

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