Staffing, Cost Management Top 2021 Priorities for Medical Groups

January 28, 2021 - As medical groups come off one of the most tumultuous years in modern history, leaders are prioritizing items like staffing and revenue and cost management in order to succeed in 2021.

According to a new report from the Medical Group Management Association (MGMA), staffing topped the list of biggest challenges medical groups faced in 2020, followed by cost and revenue, practice transformation, technology, and operations.

The list was generated from the results of national weekly polls hosted by MGMA that surveyed more than 4,800 healthcare leaders on the biggest issues and trends in medical practice management and the healthcare industry at large.

The biggest challenges medical groups faced in 2020, which are arguably one of the hardest years for healthcare providers, are now turning into new opportunities for leaders to ensure financial stability and resiliency in the new year.

"While 2020 presented unparalleled challenges, the historic year was pivotal in shaping our industry's future, accelerating us to address and find solutions to problems we have seen and felt for decades,” Halee Fischer-Wright, MD, MMM, FAAP, FACMPE, president and CEO of MGMA, said in a press release.

READ MORE: Medical Groups At Least A Year Away from Recovering Revenue Losses

In a poll asking about staffing shortages amid the initial spread of COVID-19, about 40 percent of healthcare leaders said their organizations are facing a gap in workers.

Staffing shortages continued to get worse as the novel coronavirus spread throughout the country, even surging again in the fall of 2020. By November, a fifth of American hospitals were understaffed, according to data from HHS and obtained by The Atlantic.

The healthcare industry is already facing a shortage of up to 139,000 physicians by 2033, without accounting for the impact COVID-19 has had on healthcare professional mortality and job disruptions, the Association of American Medical Colleges (AAMC) predicts.

Over half (53 percent) of healthcare leaders are addressing provider and staff mental health during the pandemic, MGMA found.

However, cost and revenue challenges may have exacerbated staffing shortages from a financial perspective, leading to lasting revenue cycle issues.

READ MORE: Independent Medical Groups Increased Profit Per Provider in 2019

About 61 percent of healthcare leaders reported a dip in compensation during COVID-19, MGMA reported, with most respondents being at the C-suite or senior management-level. Additionally, one in three leaders said their organization has reduced staff compensation amid COVID-19.

For 82 percent of leaders, provider compensation reductions impacted some or all of their providers.

Medical groups were forced to shut down in-person services throughout the pandemic to minimize the spread of COVID-19. On average, groups saw a 60 percent reduction in patient volumes and a 55 percent reduction in revenue at the time, a previous MGMA report revealed.

With such significant revenue losses, nearly half of practices had to furlough staff and 22 percent were forced to lay off some employees permanently.

2021 will be the year to turn around financial losses and bolster staffing to ensure stability and resiliency during the ongoing pandemic. But it will not be easy for medical group leaders to execute.

READ MORE: How COVID-19 Imperiled Physician Practices, And How to Save Them

“I strongly feel that the priorities for medical practices in 2021 should be focused on making sure operations are well run. Revenue cycle management needs to be a well-oiled machine. No group can afford to be losing money, and many do struggle with keeping their A/R current. Being able to pivot quickly can mean the difference in keeping jobs and surviving for your practice,” says Katie Nunn, MBA, CMPE, an MGMA consultant.

Some medical group leaders (33 percent) are changing how they measure and report key performance indicators (KPIs) and other metrics as business routines have changed because of COVID-19, MGMA reported.

Increased access to their data has become critical to implementing the flexibility and agility medical groups need to respond quickly to changes in financial performance during the ongoing pandemic and will continue to play a major role in medical groups in 2021.

Medical group leaders are also leveraging practice transformations, such as telehealth, remote patient monitoring, and new space needs, to offer cost-effective care that patients want while right-sizing operational items to minimize excess costs.

Additionally, value-based contracting will be a major trend in 2021, but unlike past years, there may be most of an impetus to expand or execute the value-based reimbursement strategy considering the financial stability the contracts can offer in the face of declining volumes.

“Looking forward into 2021 and beyond, payer contracting complexity will increase and require an even greater focus and astute approach. The pandemic has created additional expense for practices and the need for reimbursement above and beyond current rates is imperative. Clinicians depend on payer partners to come to the table and work collaboratively to care for our communities,” said Doral Jacobsen, MBA, FACMPE, MGMA consultant.