Physician net revenue was down 4.5% in 2020 compared to 2019 as the industry still struggles with declines in patient volumes due to the COVID-19 pandemic, a new report finds.
The report, released Tuesday (PDF) by consulting firm Kaufman Hall, said practices must navigate the continuing shift away from fee-for-service Medicare and to the payer mix away from commercial plans to Medicaid due to job losses stemming from the pandemic.
“Managing care costs will be a critical focus, as the industry is expected to see significant shifts in care models from in-person to telehealth and changes in payer rates,” the report said.
Physician practices have experienced a roller coaster in terms of revenues last year as the pandemic caused offices to shut down in March, but then volumes rebounded in May and June when shelter-in-place orders lifted.
Physician compensation per each full-time equivalent increased 1.5% from July to October 2020. Net revenue per physician FTE also rose 8.1% from July to October, but it was down 4.5% for the year.
They also have to deal with a major decline in new patient visits that are key to growing a practice, the report said.
Physicians do not just have to deal with lower patient volume and revenues this year, but also a changing care landscape with competition from new telehealth services that could siphon routine care.
“To compete, physician practices will need to create permanent virtual care options that accommodate both patient preferences and clinical needs,” the analysis said.
At the same time, physician expenses have only increased slightly. This is a major difference from hospitals that have faced massive increases in expenses for supplies and drugs.
Physician expenses are down 5.7% below 2019 levels, the report found. The practices that had the highest increases in expenses were primary care, OB/GYN and surgical specialties.
The report’s data are based on information from Syntellis Performance Solutions, a management software solution that contains more than 68,000 physicians and 100 specialties.