Physician Pay Up, But Patient Demand, Labor Market Causing Struggles: Report

Aine Cryts

May 04, 2022

Many physician practices across the country have been slammed since the start of 2022. With the increased number of patients seeking care came increases in physician productivity, compensation, and revenues compared with the last quarter of 2021, according to a recent report.

But it's not all roses. The "Physician Flash Report" from healthcare management consultant Kaufman Hall confirmed what practices have known for months: They're struggling to keep up with inflation, patient demand, and a tight labor market.

Matthew Bates, managing director of the physician enterprise service line at Kaufman Hall, compares the current environment to the Roaring '20s, when the age of mass consumerism got its start. Predating that period was World War I, which ended in 1918 and resulted in 14 million deaths, and the 1918 influenza pandemic, which spanned 2 years and claimed 50 million lives worldwide.

"Suddenly, our physicians nationally are extremely busy with patients, and it's challenging because the physician practice has the same labor challenges," Bates told Medscape Medical News. Specifically, he pointed to the current difficulty of hiring and retaining front desk staff and medical assistants; labor costs are going up and practices are already struggling to staff shifts, explained Bates.

Physician Productivity, Compensation Increasing; Expenses Also Up

The median investment or subsidy per full-time employed physician and advanced practice practitioner increased 14.4% from the fourth quarter of 2021 to $288,227 in the first quarter of 2022.

Bates defines the median investment or subsidy as the net patient service revenue minus total direct expense; investments or subsidies are divided by physician full-time equivalents. Direct expenses can include physician and staff salaries, facility costs, net supplies costs, and drug costs, he said.

While the median investment or subsidy per clinician increased 1.5% in comparison with the pandemic's start in March 2020, this metric rose 8.9% from the first quarter of 2021, per the report.

The Great Plains (at 39.5%) and the Western region (23.9%) of the United States saw the greatest increases in investment or subsidy per clinician; this metric was up quarter-over-quarter for all regions and specialties included in the report.

Obstetrics and gynecology saw the most dramatic increase in investment or subsidy, with a rise of 20.8% to $303,494 in the first quarter of 2022.

Physicians' increased productivity also resulted in higher compensation, according to the report. Physician compensation increased 3.6% quarter-over-quarter to $349,072 in the first quarter of this year, an increase of 6.6% when compared with the same quarter in the 2 previous years.

Expenses related to physicians and advanced practice providers shot up to a 2-year high of $946,602 for the first quarter of 2022; that's a 7.1% increase from the last 3 months of 2021 and a 10.5% increase from the first quarter of 2021.

Tackling Patient Access in a Tight Labor Market

The increase in patient volume is driving patient access issues, said Bates. Patients want to see a physician and the practice often can't fit them in for 6 weeks. While referring a patient to urgent care or the emergency department may be appropriate for primary care practices, it's not a good option for other specialties, such as orthopedics, he explained.

Practices can extend hours, but that can be challenging given the labor shortage, said Bates. Large health systems have more flexibility and can provide patients with access to a same-day or next-day visit with a physician assistant or a nurse practitioner, but that can be difficult for smaller practices, he added.

Leaders at smaller practices have to "build a place people want to work" to encourage staff to work extended hours to accommodate the increase in patient volume, said Bates. Hospitals and integrated delivery networks can build call centers where the employee has access to other physicians or advanced practice providers' schedules, if a patient's physician isn't available.

The report relied on data captured from more than 100,000 employed physicians and advanced practice providers across more than 100 specialties. The data came from Chicago-based financial software company Syntellis Performance Solutions.

Aine Cryts is a veteran health IT and healthcare writer based out of Boston.

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