Doctor Practices, Losing $250,000 A Year, Reel From Labor Costs

Doctor Practices, Losing $250,000 A Year, Reel From Labor Costs

technology By Dec 26, 2023 No Comments

Impact of High Labor Costs on Doctor Practices

Medical groups experienced significant financial challenges in 2023, with expenses surpassing revenue gains by more than $250,000. According to the American Medical Group Association (AMGA), this was largely due to high labor costs triggered by healthcare staff shortages.

Insights from the AMGA Report

The AMGA 2023 medical group operations and finance survey, based on data from over 15,000 providers and 5,700 clinics, revealed the strain on medical group practices. The survey highlighted the struggle to control expenses that outpaced rising revenues. “Survey results indicate that ongoing external pressures—such as cost of labor, staffing shortages, CMS fee schedule, and regulatory changes—are impacting medical group performance,” stated Mike Coppola, AMGA Consulting Chief Operating Officer.

Financial Challenges Faced by Physician Groups

System-affiliated groups reported a median loss per physician of over $249,000 in 2023. While median total revenue per physician saw an increase, reaching $719,901 from $608,639, median total expenses grew even faster, escalating over $1 million per physician. It emphasized the significant impact of high labor costs on the financial stability of physician groups.

Impact of Rising Labor Expenses

It was revealed that labor typically represents 80% of total practice expenses, including physician and staff salaries. Clinical staff expenses per physician surged from $126,792 in 2021 to over $200,000 in 2023, reaching $208,316. This increase further exacerbated the financial strain on medical groups.

Adopting Strategies to Mitigate Financial Losses

Executives overseeing medical groups have made it a priority to address staffing needs while also revising medical care and treatment models. They are embracing automation and technologies to enhance operational efficiencies. As a result, some practices are increasingly turning to telehealth as a means to reduce labor costs and improve patient care.

Embracing Technological novation/ target=”_blank”>Innovations

Leaders in the medical field are steadfastly focused on enhancing operational efficiencies. This includes deploying strategies such as virtual visits, patient self-scheduling, care team redesign, and leveraging AI to automate processes. These measures are aimed at streamlining operations and enhancing the overall patient experience.

The Transition to More Technology-Driven Practices

The shift towards greater reliance on technology represents a significant change for medical practices. It signifies a move towards more automated processes, with a heightened focus on incorporating advanced technologies to drive improvements in patient care delivery and operational effectiveness.

Source: forbes

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