Physician pay barely increased in 2020, while productivity plummeted due to the pandemic, a new survey found.
According to the latest AMGA medical group compensation and productivity survey, which reached nearly 400 medical groups representing more than 190,000 providers, increases in compensation were modest, while productivity impact was significant.
“The trends we saw in this year’s survey were the obvious result of flat compensation combined with a decline in volume of services,” AMGA consulting president Fred Horton said in a press release. “Medical groups paid a steep price to retain their physician talent,” the statement went on, noting that the pandemic has emphasized the need for health providers to “reconsider their compensation plans so that they rely less on obligatory annual pay increases and more on incentivizing productivity that rewards valuable outcomes.”
Transitioning to value-based compensation structures will create more resiliency against “future economic downturns,” he said.
The decline in productivity was driven by canceled elective procedures, diminishing access to health services for certain patients during the year and fear around seeking in-person care due to COVID-19, the group noted in its press release.
Overall, physician pay went up less than 1% in 2020, down from the nearly 4% increase in 2019. By contrast, production decreased more than 10%, compared to a slight increase in 2019. Compensation per work relative value units (wRVUs), meanwhile, rose more than eight points since 2019, the survey found, compared to a slight drop from 2018 to 2019.
To mitigate the disparity, 50% of survey respondents said they limited reductions in production compensation, while a quarter pushed advancing physician salaries to be balanced at a later date.
A complex formula determines physician pay and Medicare reimbursement. When wRVUs rise more than reimbursement, expenses outpace revenues, and organizations may become financially unstable, explained AMGA Consulting Director Elizabeth Siemsen. In December 2020, the Centers for Medicare & Medicaid Services (CMS) revised the physician fee schedule for 2021 with just this outcome, sparking criticism from trade groups. Last month, it proposed to do the same again for 2022. While a decline in production is expected alongside a decline in compensation, that has not been the case because of CMS revisions and COVID-19 mitigation strategies.
“This disruption poses a potential future risk to physician compensation when compensation-per-wRVU declines as a result of the wRVU increase stemming from CMS’s changes,” Siemsen told FierceHealthcare.
While most physician pay remained stagnant in 2020, family medicine saw a 1.27% increase since 2019. Among specialty care, neurology saw a similar increase of 1.25%. Among surgical specialties, which saw the biggest drop in productivity of any specialty group, only emergency medicine saw an increase, of just over half of one percent. And among advanced practice clinicians, only nurse practitioners saw a slight increase in pay, at 1.29%.
Because of all the changes, “Organizations will need to analyze how they plan to pay going forward,” AMGA Consulting President Fred Horton told FierceHealthcare. Otherwise, they may end up paying “significantly more overall.”