The COVID-19 pandemic affected all facets of the world economy. On a macro scale, entire countries saw their gross domestic product (GDP) drop as businesses closed, jobs were lost, and state-supported healthcare expenditures rose. However, in the microeconomic world, some individuals found opportunity during the pandemic, including many healthcare workers who worked long, strenuous shifts caring for patients with the disease and realized a personal income gain even though there was “nowhere to go and nothing to do” due to travel and other restrictions.
The pandemic began to affect parts of the United States as early as February 2020 and by April virtually the entire country shut down, including many physician practices. Data describing the impact of the pandemic are rare; however, MGMA’s data collection and survey systems were in place and documented much of what happened to medical practices during the pandemic.
An MGMA data report published in early 2021, Quantifying COVID-19: Measuring the Pandemic’s Impact on Medical Practices, describes information provided by 142 practices that participated in the 2020 MGMA Monthly Survey with detailed information on provider productivity and practice operations. One graph from the report is most relevant to understanding what happened in medical groups.
Figure 1 describes, by month, the volume of work RVUs (wRVUs) for primary care physicians, nonsurgical specialists and surgeons. Every specialty reported a substantial reduction in production in April, followed by a slow recovery to pre-pandemic levels. The reduction was greatest for nonsurgical specialties, such as cardiology, gastroenterology, and other nonsurgical specialists; however, surgeons and primary care physicians also experienced similar reductions in their production.
While production is highly associated with physician compensation, there are many other factors that contribute to physician compensation, and the 2021 MGMA DataDive Provider Compensation has the definitive information as to how COVID-19 impacted total compensation and production last year.
Table 1 lists compensation and wRVU information for six specialties. The reductions in wRVUs reported in the 2020 MGMA Monthly Survey are reflected in reductions in annual wRVU production between 10.9% and 15.2% for these specialties, with noninvasive cardiology and gastroenterology having the greatest reduction. When clinics reduced patient visits and hospitals and ambulatory surgery centers (ASCs) eliminated “nonessential services” in February, March and April 2020, it was impossible for physicians to make up the lost business during the remainder of the year, and annual wRVU production suffered.
The table also shows the pandemic had less of an impact on compensation than the severely affected productivity numbers. Just as noninvasive cardiology and gastroenterology reported the greatest reduction in wRVUs, these specialties also reported their compensation suffered during the pandemic. Comparatively, primary care did well by the end of 2020. While the primary care specialties also showed a reduction in wRVUs, their compensation levels were not reduced. Compared to the average change in compensation for the previous five years, family medicine without OB and general internal medicine actually exceeded their historic annual increases in compensation. Unfortunately, the nonsurgical specialists and surgeons, despite reporting an increase over 2019, saw their annual percentage increase fall behind what they experienced in previous years.
While the overall changes in physician productivity and compensation are important gauges measuring the impact of COVID-19 on practices, the averages conceal what actually occurred at the practice level. Drilling down by practice owner, a “behind-the-curtain” look shows independent physicians reported a very different experience than those who practiced in health systems.
Figure 2 shows that while independent physicians reported less production, their production losses generally were lower and, in some specialties, substantially less than the doctors who were part of health systems. Throughout the pandemic, communications with independent practices indicated they were more flexible in scheduling patients and opening their practices than health system practices that often had to abide by systemwide mandates that limited hours and patient services.
The differences in practice ownership were also manifested in physician compensation (Figure 3). Physicians in hospital-owned practices were relatively shielded from the effects of the pandemic. Since health systems can subsidize operating losses with their financial reserves, doctors employed by health systems are somewhat insulated from the revenue losses that occur when productivity declines. Unfortunately, independent practices operate as a closed system, and physician compensation is limited to the net of revenue collected during the year minus operating expenses, and they must bear the financial consequence of lower revenue.
While health systems and independent practices participated in federal government pandemic relief programs, the benefits may have had greater impact for independent practices that perhaps lacked financial reserves, as federal loan programs helped keep the practices financially solvent. The Paycheck Protection Program (PPP) enabled organizations to retain staff even when patient volumes were low, and the CARES Act Provider Relief Fund reimbursed healthcare-related expenses and revenue losses attributable to COVID-19. Both programs were important contributors to the bottom line and to physician compensation.
Perhaps the most significant result of the COVID-19 pandemic will be the lessons that practice administrators learned as they struggled to continue in-person care on a limited basis; expanded telehealth and audio-only visits; and complied with ever-changing state and local restrictions on access, social distancing, sanitation and mask-wearing requirements. The 2020 MGMA Monthly Survey data show that practices of all types quickly adopted new care delivery methods and were able to resume full operations by mid-summer.
Practices suffered from “COVID misery,” and the pandemic unquestionably affected physician compensation, but the pandemic also made many organizations more resilient and better prepared to address future challenges. Just as vaccines are protecting individuals, the lessons learned during the pandemic have inoculated medical groups and made them better prepared for the future.
Learn more
- Access all MGMA's latest pandemic resources in the COVID-19 Recovery Center.
- Read more Data Mine articles in past issues of MGMA Connection magazine.
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