The COVID-19 pandemic had a global impact on virtually all aspects of life, changing how individuals lived and worked. Only now, three years since the pandemic began, have individuals and businesses resumed their “new normal” patterns. The U.S. healthcare system was severely disrupted, as physicians and hospitals learned how to diagnose and treat patients with a previously unknown disease, enhanced infection control methods, and expanded use of personal protective equipment (PPE). This happened as practices expanded telemedicine and adopted new operational processes and procedures to accommodate government mandates for social distancing and mask wearing.
The impact of the pandemic on physician compensation was addressed in the July 2022 Data Mine, “COVID-19 recovery: Physician compensation and productivity’s slow road back to pre-pandemic normalcy.1 Similarly, the pandemic’s effect on practice revenue and expenses was the subject of the October 2022 Data Mine, “COVID-19 recovery: The long road back to normal.”2
The 2022 MGMA DataDive Cost and Revenue (based on 2021 data) includes the option of examining five years of data. Since MGMA surveys have identical definitions and data collection methods year to year, the report provides an excellent view of the changes in practice performance over time.
After observing substantial changes in physician compensation and practice operations during the three years of the pandemic, it is extremely surprising to find that COVID-19 had only a minor impact on practices’ revenue cycle management, the process of recording, billing, and collecting payment for services. Even a cursory review of the survey reports reveals that even at the peak of the pandemic in 2020, revenue cycle operations continued with far less disruption than what occurred in practice operations.
Table 1 examines five key metrics used to assess revenue cycle performance in physician-owned multispecialty groups with primary and specialty care. These practices reported that median adjusted fee-for-service (FFS) charges per full-time-equivalent (FTE) physician in 2020 were at similar levels to what was reported in 2018 and 2019. More importantly, the key revenue cycle metric — adjusted FFS collection percent, measuring how well practices collected billed charges — improved in 2020, most likely due to the ability of the business office staff to focus their collection efforts on fewer accounts. Median total accounts receivable per FTE physician in 2020 was in the range reported during previous years, as was median bad debt per FTE physician, while median days adjusted FFS charges in A/R showed only an upward “blip,” reflecting a minor increase in total A/R and a slight decrease in adjusted FFS charges.
Table 2 focuses on what happened in hospital-owned multispecialty groups with primary and specialty care. While overall revenue cycle performance was not as good as what was reported in similar physician-owned practices, the five-year trend shows that revenue cycle operational performance in hospital-owned practices in 2020 was similar to pre-pandemic performance. In 2020, median adjusted FFS collection percent dipped by a full percentage point, and median bad debt increased slightly from the previous year but were not substantially different from what was reported in 2017.
For physician-owned and hospital-owned practices, the data reported for 2021 operations showed a full recovery from the minor disruption in revenue cycle performance during the height of the pandemic. Physician-owned multispecialty practices with primary and specialty care reported improvements in every revenue cycle metric, while their hospital-owned peers reported substantial improvements in median bad debt per FTE physician and median adjusted FFS collection percent. Hospital-owned practices did report that median total A/R per FTE physician had increased, which had a corresponding effect on an increase in the median days adjusted FFS charges in A/R.
Bad debt per FTE physician is perhaps the single most important revenue cycle metric, as it directly reflects lost revenue to the organization. Figures 1 and 2 display the tabular bad debt information, providing a visual assessment for the five-year reporting. The graphs show how physician-owned and hospital-owned multispecialty groups with primary and specialty care improved their performance post-pandemic compared to what was reported in 2017. Physician-owned groups reported a 34.1% reduction in median bad debt per FTE physician over the five years, while similar hospital-owned practices reduced median bad debt per FTE physician by 24.5%.
The COVID-19 pandemic affected practices of all types in multiple ways. Examining the five-year trends for operations and revenue cycle performance, physician-owned practices experienced the pandemic differently than hospital systems and appear to have recovered more quickly. Physician-owned medical groups were better able to maintain operations during the pandemic since they were better able to direct their staff resources to match patient demand, whereas hospital-owned practices frequently reported that a surge in COVID-19 patients required their health system to close clinic services to reassign nurses and to staff inpatient services. The interruption in clinic services in many hospital-owned practices could also be a contributing factor to similar disruptions in billing and corresponding decreased revenue cycle performance.
Government support programs such as the Paycheck Protection Program (PPP) that helped businesses keep their workforce employed during the COVID-19 crisis also enabled employees to retain their health insurance coverage even when many businesses limited operations or transformed into “virtual” organizations of remote workers. With many workers continuing their health insurance coverage and not becoming uninsured, medical groups continued to bill and be paid for health services. Continued commercial insurance coverage benefited physician-owned medical groups more than hospital-owned practices since physician-owned practices reported their payer mix included more than 14% more commercial insurance than hospital practices.
Overall, while COVID-19 caused considerable disruptions in 2020, the national vaccination program and better treatment options available since January 2021 enabled most healthcare organizations to adapt their policies and procedures into “new-normal” operations even while the pandemic continued to impact other industries. The five-year trends in revenue cycle performance are evidence that, while COVID-19 impacted billing and collections, medical groups’ business offices are resilient and were back to business as usual only a year after the start of the pandemic.
- Gans DN. “COVID-19 recovery: Physician compensation and productivity’s slow road back to pre-pandemic normalcy.” MGMA Connection. July 2022. Available from: mgma.com/dm-july22.
- Gans DN. “COVID-19 recovery: The long road back to normal.” MGMA Connection. October 2022. Available from: mgma.com/datamine1022.