The AMGA 2023 Medical Group Operations and Finance Survey collected data from over 15,000 providers and more than 5,700 individual clinics, giving a clear look at the current money situations in medical practices. One main finding is that while the median total revenue per physician rose from $608,639 to $719,901 since 2020, this 9.1% increase in income does not keep up with the much higher rise in operating costs.
Operating expenses went up from a median of $905,283 to $1,036,238 per physician, a 26.5% increase. This gap means medical groups are spending much more to provide care than they get back. When expenses grow almost three times faster than revenue, financial pressure on medical practices gets stronger.
This problem is especially clear in system-affiliated medical groups, where the median loss per physician has passed $249,000. These losses force administrators and IT managers to find practical ways to cut costs without lowering the quality of patient care.
Several outside pressures have led to rapid cost increases. One big cause is higher labor expenses. Staffing shortages have been a problem since the COVID-19 pandemic, with many medical practices finding it hard to hire and keep qualified workers. These shortages force practices to offer higher wages, bonuses, or other perks to attract staff, which raises payroll and benefits costs a lot.
Rules from agencies like the Centers for Medicare & Medicaid Services (CMS) also add to expenses. Changes in payments and compliance rules create more paperwork and often lower expected payments, causing more money strain.
The AMGA survey also pointed out problems with revenue cycle performance, especially related to controllable denials. These denials make up 17.1% of total insurance claim denials and can be avoided with better management and process improvements. Every denial means delayed or lost revenue, which hurts the practice’s profits, especially when money is tight.
By working to reduce these denials, medical groups could improve cash flow and revenue without changing how they care for patients. This needs accurate coding, fast billing, and close follow-up steps, which many groups find hard to do with current staffing issues.
During the COVID-19 pandemic, telehealth visits rose quickly and became important for patient care. However, the 2023 survey shows that telehealth visits have since stopped growing, especially in primary care. This means medical groups must keep balancing in-person visits with virtual visits to meet patient needs while also managing costs.
The rise in virtual visits during the pandemic first helped cut costs by lowering expenses for physical space and some office tasks. But current staff shortages and tech needs may limit these benefits now. Medical groups need to think carefully about how telehealth fits into their work to stay efficient and keep patient access good.
Benchmarking helps medical groups compare their financial performance to industry averages. The AMGA survey gives data shown per physician full-time equivalent (FTE), per provider FTE, and per 10,000 work relative value units (wRVUs). These numbers help organizations check productivity, overhead, and revenue cycle work compared to others.
By looking at these benchmarks, managers and practice owners can find areas to improve. For example, if a group has higher-than-average controllable denials, they know to focus on improving billing processes. If labor costs are higher than similar groups, this shows a need to check staffing plans or pay structures.
Benchmarking helps make decisions based on data and shows where changes can lead to better finances without lowering care quality.
With costs going up and staff shortages, medical groups are using technology like artificial intelligence (AI) and automation to help with financial problems. AI tools can take over repetitive front-office tasks like answering calls, scheduling appointments, checking insurance, and managing billing follow-ups. Simbo AI, a company that focuses on front-office phone automation, offers solutions made for medical practices to improve work flow and lower administrative work.
Using AI to answer phones cuts patient wait times, improves communication, and reduces the need for a big front-office staff. This helps control labor costs. AI-based workflows also lower errors in patient registration or insurance checks, which helps reduce controllable denials and speeds up getting paid.
Besides phone help, AI can analyze billing data to find patterns in denials and help decide which claims need fixing. This makes revenue cycle work more efficient. With better data, medical groups can react quickly to problems, improving cash flow and lowering financial risks from delayed or denied payments.
AI is also used in patient self-scheduling platforms, letting patients book virtual or in-person visits online. This reduces administrative work and makes scheduling easier.
For IT managers and administrators, adding AI into practice management takes careful planning but can save money by cutting costs and making the revenue cycle more stable.
The ongoing labor shortage is a problem that hiring more staff alone cannot fix. So, medical groups are trying new care team designs. This means moving some tasks so clinicians spend more time with patients while automated systems or support staff handle routine messages and paperwork.
For example, AI-powered virtual assistants can answer common patient questions or reschedule appointments. This frees human workers to focus on complicated issues that need personal attention. Redesigning the team like this helps use existing staff better and prevents burnout, which can help keep workers longer.
The growing gap between revenue and expenses means medical group leaders must act carefully to manage money. Healthcare administrators and practice managers should focus on:
By focusing on these points, medical groups can better handle the rising expenses and slower revenue growth. This helps keep their operations steady while still giving good quality care.
The survey reveals that operating expenses are outpacing revenue gains for medical groups, with a median loss per physician for system-affiliated groups exceeding $249,000 and total expenses per physician increasing by 26.5% since 2020.
Median total revenue per physician increased from $608,639 to $719,901, while median total expenses grew from $905,283 to $1,036,238, highlighting a widening gap.
External pressures include the cost of labor, staffing shortages, CMS regulatory changes, which all contribute to the increased operational expenses faced by medical groups.
Telehealth services have become an important access point, with utilization increasing during the pandemic, though visits have leveled off in 2023, particularly in primary care.
Controllable denials constitute 17.1% of total denials and can be costly in a tight margin environment, indicating the need for improved revenue cycle performance.
Benchmarking provides tools for medical groups to compare their performance against external standards and identify internal trends for improvement in their revenue cycle processes.
To improve operational efficiency, groups are exploring virtual visits, patient self-scheduling, care team redesign, and automation through AI.
The survey features various metrics including operational overhead staffing, revenue cycle metrics, patient access and scheduling metrics, telehealth services data, and financial performance summaries.
The pandemic initially increased telehealth visits dramatically, but usage has since stabilized, with a focus on maintaining or improving access despite staffing constraints.
Evaluating operational challenges allows medical groups to benchmark their performance, identify key areas for improvement, and sustain the delivery of quality, cost-effective care.
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