Higher Patient Volumes, Physician Productivity Aid Revenue Growth
Physician practices experienced strong recovery in 2021 with rises in patient volume, physician productivity, and revenue growth. However, physician expenses climbed, surpassing 2020 performance.
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By - According to Kaufman Hall’s latest Physician Flash Report, patient volume, revenue, and productivity increased for physician practices with performances exceeding pre-pandemic levels.
Overall, physician productivity was up by the end of 2021. Relative to the last quarter of 2020, physician productivity, measured as physician work relative value unit (wRVUs) per FTE, increased by 21.9 percent. Physician productively also grew by 3.5 percent from the fourth quarter of 2019.
Physician compensation per FTE improved significantly compared to the fourth quarter of 2019 and 2020. This report states that growth was seen nationally and across most specialty groups, with the nationally median totaling to $342,198 in the fourth quarter of 2021, representing a 3.3 percent increase compared to the third quarter.
In addition, physician compensation per wRVU rose to $58.15, a 3.2 percent increase from quarter three to quarter four.
The rise in physician productivity sparked growth in physician practice revenue production. Net revenue increased by 7.4 percent compared to quarter three. In the fourth quarter, revenue rose to $695,088.
The report showed that primary care facilities experienced the greatest growth in net revenue per physician FTE, at a 12.9 percent increase from the previous quarter. Analysts attributed the rise to more patients seeking previously delayed care as well as seeking care before 2022 copays commenced.
“The data continue to show that physician productivity is the primary driver of fluctuations in this metric, with recent changes in payments and fee schedules having minimal impacts,” the report stated.
Additionally, net revenue per physician wRVU increased from $103.17 in quarter three to $107.44 in quarter four of 2021, representing a 4.1 percent increase. However, net revenue per physician wRVU stayed beneath the 2020 level of $108.21.
Although physician practices have seen some recovery in revenue growth and physician productivity, rising expenses continue to plague healthcare finances. Expenses grew across all specialty cohorts from the previous quarter.
In 2021, the total direct expense per physician climbed to $955,281 and was up 9.0 percent compared to 2019. Meanwhile, the total direct expense per physician rate rose 16.3 percent compared to 2020.
The report noted that health system leaders should analyze their direct expenses and look for ways to reduce the rising cost.
Physician practices continue to face operational challenges caused by labor expenses and shortages. The number of clinical and front office support staff FTEs per 10,000 wRVUs dropped by 5.8 percent over the last quarter.
In comparison to 2019, the metric increased by 4.3 percent. However, it was down 16.6 percent compared to the levels from the first year of the pandemic.
