Even as independent medical groups did well financially during 2019, health system-affiliated medical groups generated losses. That’s the topline result of the survey conducted by AMGA Consulting, the consulting arm of the Alexandria, Va.-based AMGA (American Medical Group Association), whose results were published on Dec. 22.
As a press release published by the association stated, “AMGA’s newly released 2020 Medical Group Operations and Finance Survey reveals that although most groups saw improved financial performance in 2019, independent medical groups generated a profit, while health system-affiliated groups faced a loss. The survey shows the overall median profit/investment (P/I) per provider in 2019 to be -$22,028, an improvement from -$57,426 in 2018. For health system-affiliated medical groups, the overall median loss per provider (also known as “investment per provider”) in 2019 was -$163,994 in 2019, slightly better than -$165,050 seen in 2018. For independent medical groups, the profit per provider increased to $12,434 in 2019 from $5,200 in 2018.”
In addition, “The survey also measures median profit/investment (P/I) per physician. This metric includes financial performance divided by number of physicians only, whereas the per provider metric includes advanced practice providers (APPs) in the count of “providers.” In 2019, the overall median per physician was -$32,985, a significant improvement from -$98,840 in 2018. For health system-affiliated medical groups, the overall median loss/investment per physician in 2019 was -$278,505 in 2019, a decline from the -$225,261 seen in 2018. For independent medical groups, the profit per provider increased to $16,603 in 2019 from $6,296 in 2018.”
The 2020 edition of AMGA’s Medical Group Operations and Finance Survey is its most comprehensive survey yet, featuring data from 41 independent and affiliated medical groups, representing more than 20,000 providers across 3,300 clinical sites, the association noted in publishing the survey’s results. Meanwhile, the AMGA represents 175,000 physicians practicing in larger medical groups across the U.S.
“The numbers alone are not necessarily indicative of system-affiliated groups performing worse than independent groups,” said Fred Horton, M.H.A., AMGA Consulting president, in a statement contained in the press release. “One reason for these divergent trends is that revenue generated from ancillary services, such as scans and lab work, is reflected in the bottom line of independent medical groups, but generally does not accrue to the bottom line of groups affiliated with a system. Another reason is that certain expenses are exclusive to system-affiliated medical groups, for example, system office allocations and centralized service expense allocations. Because of these nuances, we analyze compensation and production alignment, staffing ratios, and general volume-adjusted metrics to make a more apples-to-apples comparison.”
As the press release noted, “When medical groups employ both physicians and APPs, the “per provider” metric is typically utilized, with the metrics being divided by the total number of both physicians and APPs providers. P/I per physician or provider is a high-level metric of overall medical group performance. At the group level, this value represents an all-encompassing measure of all revenues and expenses for the medical group. It also takes into consideration system or overhead allocations, which may be applied differently from organization to organization. In 2019, median expense type as a percentage of overall clinic costs (per physician) were split into three primary categories. Provider compensation and benefits accounted for 61 percent of expenses, staff salaries and benefits accounted for 21 percent, and other operational expenses accounted for 18 percent. The percentage of provider compensation and benefits increased from 56% in 2018. This creates a greater need for practices to be performing at optimal levels, given that the remaining percentage for staff salaries and benefits and operational expenses is shrinking.”
