Despite the pandemic, physician compensation remained steady in 2020, with a modest increase in compensation for primary care physicians and a slight increase for specialty physicians.
Looking first at primary care physicians, the 2.6% growth during 2020 came most notably from the Paycheck Protection Program and Provider Relief Fund, both issued from the government, according to the latest research from the Medical Group Management Association’s (MGMA) annual compensation report.
It also helped that primary care doctors witnessed a rebound in patient volumes toward the end of the year. Looking at a three-year increase, primary care compensation was up 5.27%. Looking at five years, it was up 10.15%, MGMA reported.
The findings come as a surprise after a year of lower patient volumes, caps on elective procedures and a growing number of practice closures brought on by COVID-19.
The 32nd annual MGMA report was based on interviews with more than 185,000 providers across more than 6,700 physician- and hospital-owned organizations.
Despite the challenges for several specialty practices, the changes in compensation were very modest or essentially flat. For surgical physicians, who experienced low volumes due to overwhelmed hospitals, compensation decreased by less than 1% in 2020. Non-surgical specialty physicians experienced a decrease of 1.29% in compensation.
“MGMA’s modest compensation findings belie the turmoil of 2020,” Halee Fischer-Wright, M.D., president and CEO of MGMA, said in a statement. “Our numbers tell a story of a year of unprecedented challenges that could have potentially led to a serious decline in compensation across every category we track. Practices acted quickly to leverage government programs to cover staff costs and expenses during the early part of 2020. They adapted to new delivery models such as telemedicine and were able to quickly ramp up when patient volumes returned later in the year. It is a testament to the resiliency of physician groups that weathering the challenges of a year that tested us all in so many ways.”
Specialist physicians saw the steepest decrease in compensation during the onset of the pandemic and through the summer of 2020. During this initial period, a decrease in elective procedures, along with a decrease in referrals, negatively impacted specialists’ volumes and compensation.
The 2021 MGMA Provider Compensation and Production report also measured physician productivity between the spring of 2019 and 2020. It seems physician-owned practices reported the highest levels of productivity for many specialties in total encounters and work RVUs (Relative Value Units) during this time period. These encounters reflect all provider-to-patient interactions, regardless of if they were in-person or telehealth visits.
Despite the large drop in patient volumes and revenues in March and April 2020, the MGMA monthly survey found that many physician practices quickly restored productivity, with some reporting RVUs in July 2020 at the same level or even higher than January and February 2020 levels.
Summer seemed to be a turning point, as the June 2020 MGMA Stat poll found that 87% of healthcare leaders reported that their practices had recovered some patient volumes since the pandemic’s start, with nearly half of those recovering back to more than 75% of their pre-COVID-19 patient volume.
Still, the resurgence in the summer of 2020 was short-lived as COVID numbers spiked again in the fall and telehealth visits began to surge again as well.
However, the report does note that due to the drop in patient volumes during the first half of 2020, some provider practices used the slow time to redeploy resources and catch up on billing. Therefore, MGMA’s survey data showed a decline in charge collections for primary care practices in August and September, most likely due to the significant drop in professional gross charges in the spring months.
Looking ahead to 2021 and 2022, Andy Swanson, vice president of industry insights and business intelligence at MGMA, said he expects physician compensation to continue on the same trajectory seen in the past five years.
"I expect a continuation of the trends we’ve seen not just in 2020, but in the three to five years preceding: 2-3% increase year over year in primary care compensation and flat (+/-1%) compensation trajectory for surgical and non-surgical specialty compensation," he said. "Volumes will no doubt exceed those of 2020 due to fewer pandemic-related access issues, but compensation will almost certainly not increase as dramatically."
As the COVID-19 pandemic abates, physician compensation models will once again slowly start aligning to the methodologies of value-based care, Swanson told Fierce Healthcare.
"Whether those adjustments are in the forms of incentives, bonuses, escalating compensation tiers or other creative modeling techniques, it’s fair to assume that as medical groups take on more upside risk, physicians should be getting a portion of that extra earned revenue. What will be interesting to see is if penalties—in the form of unearned incentives—will be levied in compensation models moving forward as medical groups take on downside risk," he said.
Practices are also facing workforce challenges. Seventy percent of practice leaders are planning to hire a new physician position in 2021, according to MGMA. Practices are looking to fill positions after a grouping of unexpected physician retirements, furloughs and loss of employees due to quarantine or childcare, according to the report.
Paired with a tightening market for physicians, the report offers the idea of mobile apps for practices looking to add providers during the recovery. In fact, a November 2020 MGMA Stat poll found more than half of practice leaders expect to add new apps in 2021.