Medical group leaders describe evolving responses to the dual challenges of staffing, rising expenses in 2023

The dual issues of finding the right people to staff medical group practices and doing so amid rising expenses for labor and non-labor needs remain the biggest issues facing healthcare leaders in 2023.

A Sept. 26, 2023, MGMA Stat poll found that staffing — previously cited as the top challenge for medical groups leaders in 2021 and 2022 — was the biggest priority for practice leaders as they head into the fall and winter months, with 37% of all responses. Behind staffing were:

• Rising expenses, cited by more than one in four (27%) respondents;
• Leadership development (15%);
• Strategy/mergers and acquisitions (M&A), at 12%; and
• Value-based care (8%).

The poll had 485 applicable responses.

Still stuck on staffing

In recent years, healthcare administrators have shared how they have updated and added new employee benefits, revised strategies to recruit and retain medical assistants (MAs) and nurse roles, but the intense competition for healthcare workers remains atop the list of items keeping practice leaders up at night.

Some of the most common themes among this latest poll’s respondents:

• Practice leaders have standardized their approaches to recruiting and prioritizing essential positions over others. This also includes using Lean processes to standardize workflows and paying closer attention to staffing metrics.
• Several respondents said that they have started to create over-hiring plans to avoid unfilled positions and staying fully staffed for more stability amid expected turnover.
• Many administrators noted they have continued or increased use of third-party recruitment services or locum tenens for physicians and advanced practice providers (APPs), particularly for physician assistants (PAs).
• Multiple respondents noted they have embraced offshoring for certain roles, particularly in call centers, prior authorization work and revenue cycle management (RCM) functions.
• Hiring medical coders — ranked earlier this year as the most-difficult RCM role to hire — remains a difficult for some respondents.

The prolonged issue of not finding enough of the right people to hire has encouraged some practices to finally embrace artificial intelligence (AI) for certain tasks. “Long-term short staffing is pushing us to implement more AI quickly,” one respondent told MGMA, “and driving the need to motivate and inspire staff in new ways.” Other increasingly creative methods to address staffing shortages mentioned by respondents included:

• Creating new talent pipelines with a wider array of schools and training organizations, as well as increased development of in-house workforce training programs
• Hiring roles that don’t require credentials to complete appropriate tasks
• Expanding methods of advertising open positions, as well as job fairs visited to meet with potential candidates.

Beyond that, plenty of poll respondents simply noted they have continued to increase pay ranges, benefits and bonuses to minimize turnover and reduce the need to recruit and hire in the current labor market.

Learn more

A recent Ask MGMA podcast episode explores best practices for using bonuses to optimize medical practice staffing.

Continued pain from inflated expenses

Rising expenses for healthcare provider organizations remain a close second behind the continued labor pains. Earlier this summer, an MGMA Stat poll found that only one in 10 medical groups held off an increasing in operating costs this year versus 2022. As detailed in the latest Data Mine article appearing in the October 2023 MGMA Connection magazine:

While revenues plummeted during the pandemic, physician-owned groups reported that median total operating cost per full-time-equivalent (FTE) physician increased substantially in 2020 and continued to surge, increasing 7.3% in 2021 and another 7.6% in 2022. The cumulative effect of operating costs increasing more rapidly than revenue is reflected in total provider cost per FTE physician [the sum of advanced practice provider (APP) and physician compensation and benefit costs], which decreased 1.1% in the past year from 2021 levels. Hospital-owned groups faced similar challenges, with median total operating cost per FTE physician surging by 15.8% in 2021 and another 19.9% in 2022.

The article, highlighting data from the 2023 MGMA DataDive Cost and Revenue data set, found that the bottom line — measured as median net income/loss, excluding financial support per FTE physician — was nearly zero for physician-owned practices, and hospital-/IDS-owned practices saw a significant increase in reported losses in 2022.

In response to this financial squeeze, respondents to this week’s poll noted a variety of corrective strategies, including:

• Improved documentation and billing accuracy initiatives
• Re-evaluation of vendors for better pricing and engaging group purchasing organizations (GPOs) for sourcing of key supplies in conjunction with tighter management of inventory
• Increased efforts to renegotiate payer contracts to secure better reimbursement
• Instituting caps on unapproved spending for positions below the C-suite.

Learn more

For more insights from the 2023 MGMA DataDive Cost and Revenue data set, download the MGMA summary data report, Missing Pieces for Revenue Recovery in the Post-Pandemic Era.

Leadership development

Regular followers of MGMA Stat will recall last week’s poll results, which found that communication, coaching/mentoring and team building rank highly among the leadership development priorities for medical groups today.

As more senior leaders in medical groups and health systems look toward retirement, a concerted effort is underway to delegate more to emerging leaders and build new capacity among the younger generation to address challenges and opportunities. As one respondent told MGMA, “leadership development fixes the other area” through smart investments in people.

In addition to succession planning and mentoring staff who already demonstrate leadership qualities, several respondents noted that they have:

• Set up formal development plans for middle management
• Increasing access to educational seminars, book clubs and study groups to prepare practice managers for ACMPE exams
• Developing career paths for MAs alongside regular learning opportunities.

Learn more

The 2023 Leaders Conference, hosted by MGMA Oct. 21-25 in Nashville, Tenn., is an inclusive community exploring the future of our industry, with content curated for those in management and executive-level positions, as well as aspiring leaders. Join us to learn, grow and network with like-minded leaders eager to transform healthcare.

Strategy/mergers and acquisitions (M&A)

While a flurry of consolidation and dealmaking has made major headlines in healthcare in recent years, it’s perhaps not surprising that this specific area of charting ownership changes is not necessarily top of mind given the intensity of the post-pandemic challenges noted earlier. Still, revisiting existing strategic plans and updating them to set up the organization for future success is still crucial, especially among independent groups facing unique challenges in continuing to grow and not become part of the wave of acquisitions seen in recent years.

Value-based care

Another area that has been talked about at length across the industry, value-based care registered as the least-likely top priority of this poll. While the shift away from fee-for-service (FFS)/volume-based care has been underway for some time, it has not gained much speed amid the major challenges in staffing and finances across the healthcare industry:

• According to the 2023 MGMA DataDive Practice Operations report, incentive-based revenues remained stagnant in 2022 for medical groups of all specialties, a sign that value-based care adoption remains slow.
• MGMA Stat polling from May 2023 found that less than half (47%) of medical groups include quality performance metrics in their physician compensation plans, marking only a 5-percentage-point increase from a similar poll conducted in May 2022.

However, poll respondents are finding ways to take steps toward broader embrace of value-based concepts, including:

• Integrated systems within primary care to improve closed loop referrals, behavioral health access and tracking outcomes
• Building teams focused on quality to improve chronic care management
• Improving efforts to engage and educate patients to encourage them to take more responsibility for their health journeys.

Do you have any best practices or success stories to share on this topic? Please let us know by emailing us at connection@mgma.com.

Join MGMA Stat

We depend on a strong feedback loop with you to provide great resources, education and advocacy for medical group leaders. To be part of this effort, sign up for MGMA Stat and make your voice heard in our weekly polls. Sign up by texting “STAT” to 33550 or visit mgma.com/stat. Polls will be sent to your phone via text message.