Mismatch between medical group physician pay, staff pay unsustainable, report warns

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Medical groups across the U.S. face unsustainable revenue trends as the pandemic lingers, according to an American Medical Group Association report.

"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," said Rose Wagner, RN, AMGA Consulting COO. "This situation is not sustainable, and medical groups must focus on ensuring optimal efficiency in practice operations."

Five things to know:

1. Both median net revenue and expenses dropped in 2020 since many medical groups temporarily closed or limited case volume while COVID-19 surged. But revenue decline outpaced the drop in expenses.

2. Median provider salary and benefit expenses as a percentage of net revenue grew to nearly 85 percent, up from 72.1 percent before COVID-19. Provider pay was protected in general during the pandemic, although productivity was down.

3. Median clinic staff salary and benefits as a percentage of net revenue hit 22.8 percent in 2020, down from 24.2 percent the previous year, after some staff were laid off or furloughed during the pandemic.

4. Median total operating expense as a percentage of net revenue, not including salary and benefits, increased from 21.7 percent to 29 percent, reflecting the increased cost of supplies and doing business.

5. The profit/investment per physician was $1,127 last year, down significantly from $16,603 in 2019.

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