Medical Groups Faced High Expenses, Staffing Challenges in 2023

Medical groups had a rocky 2023 as expenses outpaced revenue and staffing shortages continued, a survey from the American Medical Group Association (AMGA) revealed.

The 2023 AMGA Medical Group Operations and Finance Survey, emailed to RevCycleIntelligence, reflects data from more than 5,700 individual clinics and over 15,000 providers.

System-affiliated groups faced financial challenges, with the median loss per physician at more than $249,000. While median total revenue per physician increased from $608,639 to $719,901, median total expenses per physician grew from $905,283 to $1,036,238.

Compared to pre-pandemic times, median total revenue per physician has risen 9.1 percent, and median total expenses per physician grew 26.5 percent. Labor shortages are driving increased expenses as system-affiliated groups direct money toward recruitment and retention strategies.

Medical groups are also prioritizing staffing to help maintain access to care for their patients. As shortages of physicians, advanced practice clinicians, and clinic staff persist, medical groups are adjusting processes, care models, and automation to improve efficiencies.

In particular, groups are leveraging telehealth services. While the amount and frequency of telehealth visits increased significantly during the first year of the pandemic and dropped when the pandemic subsided, telehealth visits have leveled off and remained stable in 2023.

“Survey results indicate that ongoing external pressures—such as cost of labor, staffing shortages, CMS fee schedule, and regulatory changes—are impacting medical group performance,” AMGA Consulting Chief Operating Officer Mike Coppola, MBA, said in a press release emailed to RevCycleIntelligence.

“Today’s leaders are continually focused on improving operational efficiencies through more virtual visits, patient self-scheduling, care team redesign, the use of AI to automate and drive process improvements, and other strategies.”

Survey respondents expressed the need for better revenue cycle management tools, such as external benchmarks and internal trends, to compare their performance to other groups. Around 17 percent of claims denials are controllable denials, which can be costly for groups experiencing financial distress.

Medical groups have started evaluating available options to address operational issues, including assessing current group mix and composition.

“The survey revealed the multiple operational challenges medical groups are facing today,” said Coppola. “It also indicated some key areas where they can benchmark and evaluate how they can continue to deliver quality, cost-effective care to their communities.”

Since the pandemic hit, medical groups have constantly faced workforce and operational challenges. AMGA’s 2022 edition of the survey highlighted a decrease in staffing ratios paired with an increase in staffing expenses. In addition, system-affiliated groups saw a total loss of -$188,793 after overhead allocations.