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    David N. Gans
    David N. Gans, MSHA, FACMPE

    Data MineThe COVID-19 pandemic impacted businesses of all types and had a significant impact on healthcare as physicians and hospitals responded to overwhelming numbers of COVID-19 patients. Reflecting on the pandemic, 2020 was a year of change and adaption while 2021 appears to be the time when American business began its shift from “new normal” back to something more like the old normal. 

    Medical group practices seem to be following a similar pattern. After experiencing significant disruption in 2020, practices adapted new processes, opened new lines of business, and resumed full operations in 2021. Examining the medical group practice industry, private practices reported a healthy bottom line in 2021, but health system practices experienced a slower recovery and have yet to better 2019 performance. Even though practices of all types have shown significant improvement from 2020, the pandemic caused such problems in its first year that practices had to make substantial improvements in productivity just to return to where they were two years earlier.

    To evaluate the changes in practice performance over time, it is important to have consistent measurement. Fortunately, MGMA’s annual surveys have identical definitions and data collection methods year to year, and the results published in the 2022 MGMA DataDive Cost and Revenue (based on 2021 data) include multiple years of data for practices of all types.

    The October 2021 Data Mine article, “COVID-19 misery: How the pandemic affected practice financial performance,” described what happened in the first year of the pandemic:

    • In 2020, physician-owned multispecialty practices with primary and specialty care saw a 3.6% decline in median total medical revenue per full-time-equivalent (FTE) physician from the year before while operating expenses increased 3.1%, squeezing physician compensation.
    • Similarly, hospital-owned multispecialty practices experienced an even greater problem as median total medical revenue per FTE physician decreased 13.9%. Even after cutting staff and general operating costs to the bone, they reported a 3.4% decrease in median total medical revenue after operating expenses per FTE physician.1

    Table 1. Cost, revenue and productivity benchmarks for physician- and hospital-owned practices, 2019-2021Table 1 displays the three-year pandemic experience:

    • 2019 is the base year showing pre-COVID operations;
    • 2020 is the year when many practices mandated social distancing and mask wearing, curtailed elective procedures, converted in-person to telemedicine visits, and made substantial building modifications;
    • While 2021 shows substantial recovery for physician-owned multispecialty groups with primary and specialty care, similar hospital/IDS-owned practices lag 2019 performance. 

    Figure 1. Changes in revenue and expense per FTE physician in 2020 and 2021 for physician-owned and hospital/IDS-owned multispecialty groups with primary and specialty careFigure 1 summarizes 2020-2021 changes in practice revenue and expense. Median total medical revenue per FTE physician in physician-owned multispecialty groups increased 20.7% in 2021 compared to 2020 and was 16.4% greater than what these practices reported in 2019. Unfortunately, the hospital/IDS-owned practices experienced a much lower gain of 9.2% over 2020 and a 6.0% decline from what these practices reported in 2019.

    To support the increase in revenue, physician-owned multispecialty groups with primary and specialty care increased median total operating cost per FTE physician by 7.3% over 2020 values and 11.0% over 2019. Hospital/IDS-owned practices decreased operating costs in 2020 by 24.3% from 2019 levels, as many practices curtailed elective procedures and transferred clinical staff to inpatient services. While these multispecialty groups reported a 15.8% increase in median total operating cost per FTE physician in 2021 from 2020 levels, they still spent 12.4% less than in 2019.

    Total medical revenue after operating costs represents the “bottom line” in private practices and is the best indicator to assess if medical groups recovered from their COVID year. In 2021, the combination of a substantial increase in revenue and only a small increase in operating expenses in physician-owned multispecialty practices with primary and specialty care resulted in a 19.7% increase in this bottom line. Unfortunately, their hospital-owned peers reported a small increase in revenue, coupled with a substantial increase in cost compared to their previous year, for a 3.5% decrease in total medical revenue after operating cost.

    Figure 2. Changes in wRVU and total RVUs per FTE physician in 2020 and 2021 by ownershipWhile expenses and revenues describe the changes in financial performance, productivity metrics provide another perspective on how COVID-19 affected practices. Table 1 and Figure 2 display median work and total relative value units (RVUs) per FTE physician. Physician-owned and hospital-owned multispecialty groups with primary and specialty care reported substantial increases in median work RVUs per FTE physician in 2021 compared to the previous year. Looking more closely, while physician-owned and hospital/IDS-owned practices had substantial increases in productivity in the past year, their overall change from 2019 was much less. Physician-owned multispecialty groups reported a 13.5% increase in wRVUs and a 3.2% decrease in total RVUs compared to 2019, while hospital/IDS-owned groups had a 7.4% increase in wRVUs and a 9.1% decrease in total RVUs over the two years.

    Since the pandemic affected every American business, the U.S. government created relief programs to lessen the financial impacts. Physician groups especially benefited from the Paycheck Protection Program (PPP), which provided a cash influx that allowed organizations to retain staff, and the CARES Act Provider Relief Fund reimbursed healthcare-related expenses and revenue losses attributable to COVID-19. These programs continued in 2021 and helped practices report better financial performance throughout lockdowns and diminished visit and procedure volumes. 

    The performance reported by physician-owned multispecialty groups with primary and specialty care suggests that these practices recovered financially from the COVID-19 pandemic. However, even though their 2021 financial performance exceeded 2019 levels, their future remains uncertain. The government assistance programs that contributed to their recovery ended, yet many of the problems these practices experienced in recent years persist. The supply chain remains disrupted, and inflation is raising costs for supplies and equipment. An even more serious problem may affect practices — being able to recruit and retain staff at a wage scale that competes with businesses inside and out of healthcare, while managing practice overhead. While increased use of new technologies have changed practice expenses, medical group practice remains a “hands-on” industry, and staff costs are increasing to levels that cannot be sustained at current reimbursement levels.

    Overall, the financial data suggest that physician-owned medical groups have symptoms consistent with a full recovery; however, they must diligently watch for any negative indications that productivity is decreasing, expenses are rising, or revenues are declining. Hospital/IDS-owned practices face an even greater challenge of continuing their road to recovery while avoiding any relapse caused by the multitude of challenges medical groups are confronting.


    Gans D. “COVID-19 misery: How the pandemic affected practice financial performance.” MGMA Connection. October 2021. Available from:

    David N. Gans

    Written By

    David N. Gans, MSHA, FACMPE

    David Gans, MSHA, FACMPE, is a national authority on medical practice operations and health systems for the Medical Group Management Association (MGMA), the national association for medical practice leaders. He is an educational speaker, authors a regular Data Mine column in MGMA Connection magazine and is a resource on all areas of medical group practice management for association members. Mr. Gans retired from the United States Army Reserve in the grade of Colonel, is a Certified Medical Practice Executive and a Fellow in the American College of Medical Practice Executives.

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