Latest / Off the Chart: A Business of Medicine Podcast / S1 Ep164: Pay is up, productivity is down. Is it sustainable? With Andy Swanson of MGMA
Transcript
- Speaker 1 0:00 If cost continues to go up, including salaries, but reimbursement continues to stay flat or negative compared to consumer price index increases in inflation, then no, things are not sustainable, I Austin Littrell 0:25 Welcome to Off the Chart, a business of medicine podcast featuring lively, informative conversations with healthcare experts, opinion leaders, and practicing physicians about the challenges facing doctors and medical practices. My name is Austin Luttrell. I'm the associate editor of Medical Economics, and I'd like to thank you for joining us today. In today's episode, Physicians Practice Managing Editor Keith Reynolds sat down with Andy Swanson, Chief Customer Success Officer at the Medical Group Management Association, or MGMA, to talk about the year physician pay and productivity finally split. They get into what's driving the divide, how the new Medicare efficiency adjustment will land on procedural specialties, where physician burnout stands, and the one number that Swanson thinks every practice leader should be tracking beyond work RV use. Andy Swanson, thank you for joining us. And with that, let's get into the episode. Keith A. Reynolds 1:10 Hey there, folks. Today we're talking to Andy Swanson, the Chief Customer Success Officer at MGMA. How you doing today, Andy? Speaker 1 1:16 I'm well, Kate. Good to see you. Keith A. Reynolds 1:17 Always a pleasure. So let's just dig right in. Today we're talking about the provider compensation and productivity data report. We think that just came out recently. So Andy's here to answer our questions. Let's go. The headline finding this year is that pay went up while productivity went down, the first time those two have split in years. What is driving that? Speaker 1 1:39 Yeah, so I would say two things. First, the encounter level is slightly down, and our ratio of encounters to RBUs is actually staying flat. So, what that basically says is, while encounters are down, those patients that doctors are seeing actually have higher acuity and a little bit more complexity. So, perhaps what's going on is that we are moving lower acuity patients to our CPPs and non-physician providers, and so we're offloading some of the lower burdensome case load to the right level of care, and physicians are seeing the right level of care. However, compensation slightly went up this year, actually a little less than a CPI would tell you, but still year over year, anywhere between one and a half and 3% for primary care, non-non surgical specialty, and specialty care surgical specialty care. So, compensation continues to rise while RVUs are going down slightly. I think that's the takeaway. Pay has got to keep up with the times, so as consumer price index goes up by 3% and we're only paying doctors about one and a half to two and a half percent more. Yes, pay is going up disproportionate to RBU production, however, not as much as inflation. So I think those are the drivers of the higher expense and quote unquote lower production, but I warn about the lower production, because I believe while case volume might have slipped slightly in encounters, the complexity still remains high for position providers. Keith A. Reynolds 3:15 Okay, so the sort of dynamic you just described, you know, it's is it sustainable, like, is if this is the trend that the industry is going in, you know, is it can it, can it maintain itself? Speaker 1 3:26 Well, there's two I would say long-term unsustainable factors here. The first is, yeah, I mean, in theory, pay can't keep going up and up and up while production goes down. It's one year, so I want to be cautious about that, but the second thing that's causing pay to go up is the cost of running practice, both in salary and expense tied to position costs and other, you know, clinician costs, but also all the other costs that are associated with medical groups, and so if cost continues to go up, including salaries, but reimbursement continues to stay flat or negative compared to consumer price index increases in inflation, then no things are not sustainable. So, lower costs in position groups is going to have to be imperative, which includes salaries, to be sure. But there's gonna, there's going to be a breaking point on reimbursement, and as reimbursement decreases or goes flat, it's not sustainable, so those two things together are a recipe long term for problems. Keith A. Reynolds 4:29 Okay, so the efficiency adjustment just took effect at the beginning of the year, and it's cutting, you know, the work review value of 1000s of procedures for an administrator. What's the one thing they most need to understand about that, Speaker 1 4:43 so the cost is two and a half percent, on like you said, about 7700 codes, disproportionately affecting procedural volume, and not necessarily time-based procedures. So, for primary care, largely safe, you know, relatively unchanged, relatively speaking. For non-surgical providers and surgical providers, yeah, it's going to be a big deal, and so I think all benchmarks upcoming in this coming calendar year are going to have to start with the understanding of kind of procedural volume mix and where that two and a half percent cut is going to be felt in full extent, and where it's going to be felt in, in a nominal extent. So, yeah, I mean, I think all, almost all non-surgical providers, so dermatologists and oncologists, and all these folks, and surgical providers, orthopedic surgeons, or all neurological surgeons, pediatric surgeons, like all these people, you should walk in thinking, hey, listen, I'm going to see somewhere between a one and a half and two and a half percent cut in RDU, not tied to the provider's actual performance in encounters, but just on paper, that's just what's going to happen to those codes. So, how do we combat against that? Right, that becomes the next logical question, and the answer is, we have to watch our encounters and our RDU mix to make sure that those patients that we're seeing, you can, if possible, you know, increase that number slightly per provider, and make sure that the high acuity patients are making sure they find their ways to those specialists, and they're not being seen by EPPs. We're really doing a good job of kind of the bifurcation of caseload mix, making sure that the procedural volume is going where it needs to go, and the visit volume is going where it needs to go, and really locking down closely kind of those schedules based on the acuity of anticipated patients, and kind of making sure that we're maximizing our investment in the position that we have, and making sure that we're getting as much out of them as we possibly can, tied to the case mix, that's really how we combat this arbitrary decrease in kind of reimbursement. All Keith A. Reynolds 6:50 right, so you know this adjustments hitting specialties that are already really hard to recruit for: urology, interventional cardiology, radiology, ophthalmology, those sorts of deals. You know, how should a group prepare for, you know, the imminent squeeze? Speaker 1 7:07 Think there's two things. So, first, if you're searching for a physician, do not think you can arbitrarily cut your salary, starting salary by two and a half percent, and no problem, every physician is going to be happy to receive slightly less pay than they would have gotten in 2025 so presuming that we're going to keep salary levels flat, although MGMA data would suggest that the significant march up in starting salary that happened beginning in COVID and kind of plateaued or kind of peaked last year, while it has now plateaued, and so, while we see some starting salary coming down slightly, we are not anticipating significant decreases. So, we've reached the peak, and now we're probably at a plateau. So, now we have to maintain where we are with compensation, because if you're recruiting one of those hard to recruit specialties that you just listed, decreasing that starting salary is probably not going to land you the top quality candidate, so then it becomes exactly what I suggested before, the schedule management, it's watching, you know, the patient load on those new providers, making sure that perhaps they're seeing a few more patients than in disproportionately not using APs, while we're getting those positions ramped up, and we're getting the most out of our investment in them as we start, where people are staffing our ends or pas alongside of these doctors. Maybe the ratio in starting physicians is a little bit lower, and we're using that specialty that specialists hands on more patients out of the gate, and then thinking about ramping up ancillary support down the line, not in first year or second year, so we're getting the most out of that investment that we're putting into it, but again, it's watching kind of encounter mix, you know, CPT code mix in the patients that those physicians are seeing, making sure we're just getting the most, you know, not just production, not just a number of patient encounters, but the, the relative acuity that the, that the provider is seeing from the patients that are going into those encounters. Keith A. Reynolds 9:19 Hey there, Keith Reynolds here. And welcome to the p2 Management Minute. In just 60 seconds, we deliver proven, real-world tactics you can plug into your practice today, whether that means speeding up check-in, lifting staff morale, or nudging patient satisfaction north. No theory, no fluff, just the kind of guidance that fits between appointments and moves the needle before lunch. But the best ideas don't all come from our newsroom, they come from you. Got a clever workflow hack, an employee engagement win, or a lesson learned the hard way? I want to feature it. Shoot me an email at K reynolds@mjlifesciences.com with your topic, quick outline, or even a smartphone clip. We'll handle the rest and get your insights in front of your peers nationwide, we're. Let's make every minute count together. Thanks for watching, and I'll see you in the next p2 management minute. Also, burnout has reached what the report calls a baseline condition. You know, one in three groups are losing physician to it last year. Are we just accepting that now, like, is that just the way it is in the industry? Speaker 1 10:25 To a certain degree, I'd say yes, but to a large degree, I'd say no. We've reached, I would say, a new baseline, where coming out of the pandemic again, we were reaching peaks that were untenable and unsustainable. I think a lot of groups have done a good job of addressing, you know, kind of core burnout issues. Actually, the production conversation that we're having right now is kind of corollary to this, right? So, yes, we've reached maybe a new baseline where there's, I think, one in three doctors are suggesting that they're, you know, leaving practice because of burnout-related issues. That's that too is unsustainable, especially with a physician crunch that we're going to be in, or in today. So, I think the groups that are doing a good job of schedule management decreasing slightly, you know, production, you know, untenable production levels on their physicians. I think those two things, along with the longstanding issues of technology utilization and making sure that administrative burden does not reach, you know, the bedside as much as it has in years past. I think those are the good fights that groups are still putting up in on behalf of their physicians and physician leaders, making sure that they're making wise investments in technology that are really going to see decreases in those things that can be most burdensome and most burnout driving, and I think that's where the good fight continues, and I think there's certainly more room to work to decrease physician burnout. We're not there yet, and I don't think the industry at large is suggesting that we've reached, you know, a steady state, and this is just going to be the way it is, but I think the gains that have been felt over the past few years are a little bit harder to see today, and perhaps with the advent of AI, we're going to get there, but the returns just aren't there yet, and it is Keith A. Reynolds 12:12 2026 so you know, I've got a question about AI, so like fewer than half of leaders are saying that, you know, AI has actually made their providers more productive after all the hype, everything we've heard, everything we see on the news. Why is the payoff still so uneven? Speaker 1 12:31 Well, I mean, I think the places where people are seeing.. I don't think our data says that where the, where the gains have been felt the most are largely in kind of the the AI that's being used at the bedside to capture notes, documentation, you know, things that have been cumbersome and in between patients and providers, and so good news is I would say we've we've pointed AI to help the provider where it matters most, right, with the patient relationship, so in that way, the gains that we've seen seen there have been largely successful. There isn't a physician that isn't using AI scribe to help that doesn't love the technology and isn't a big fan of some of the burden that it has reduced. I think what we are missing is where is the next or next few unlocks in efficiency gains operational effectiveness that can be augmented with AI, and so I would caution everybody, right. It's we have short attention spans. It's the middle of 2026 You know, a year ago, half of the people using AI scribes were not using AI scribes. Like, actually, our industry is slow to adopt technology, largely speaking, especially outside of clinical advancements, this has actually gone pretty well and pretty quick, and so I would urge people with a little bit of patience to suggest that over the next 12 months we've made some pretty significant gains already, and I think there's going to be another set of significant gains coming in in the coming 12 months, so to think that we all adopted online utilization back in the late 90s and early 2000s at the same rate is a flawed notion, and to think that we gained all of those gains that we feel today in the course of 18 to 24 months is also flawed thinking, so I think we just have to give it some time, the technology is there. I think our use cases are still developing, where we're going to find the most bang for our buck. And I think as we explore, test, and get some of those pilot projects going, I think we're going to see some of that manifest into true return. We're just not quite there yet, but check back with me at the end of the year, maybe we'll have some other exciting new things to talk about. Keith A. Reynolds 14:43 Oh, you telling me I should throw in on the Open AI IPO? I'm that's that Speaker 1 14:51 no personal investment advice, my area of expertise. Keith A. Reynolds 14:57 All right, so if you could get a practice, every practice. Peter to track one number beyond work RV use this year. What would it be? Speaker 1 15:05 It's funny, I've been in MG May 11 years, and it's been a minute since we started talking about total visit volume, Austin Littrell 15:15 which Speaker 1 15:16 sounds weird, because that's pre-RVU stuff that we were talking about, but as we moved all in on RBUs and production or provider, I think we lost sight of kind of the total populations that we're serving and how we're serving them, encounters, patient visits, whatever your organization is thinking about. I think that number becomes really important when you start to then look at the division of those encounters across the different clinicians that work in your group, whether it be a physician or an APP care navigator, or whoever that happens to be, I think thinking about that visit volume and how we're handling that visit volume becomes really, really important again. So it's almost a little back to the future, if you will, thinking about what was good a long time ago may be a better way to start setting baselines now. And then we dive into on a per encounter basis, are we getting the most out of our providers on those encounters? So I'd suggest we go upstream a little bit, think about our title, our total patient panel size, and then think about how we're serving that panel size by each provider, and I think that might get us to a new normal on what are we expecting our providers at different levels of acuity to handle patient volumes, like, and what does that mean for benchmarks, pay, et cetera, downline, and I do think it merits an examination of compensation models, again, you know, what was old, maybe you know new again when we're starting to look at base salary models, yes, blended with production and quality metrics, I think is going to be important, as many people have done, but I think re-examining that base and what that looks like on a per encounter and certainly our views, but I think blending those, those numbers starts to make more sense now, especially as the advent of APPs come in to help us manage all the volume that we're experiencing, because we're in a physician shortage, and maybe times have changed, and now APPs become kind of the central point of contact, and we're using physicians for the highest acuity patients and care, and maybe we've, you know, achieved what we've been talking about for a very long time, which is kind of this balance in seeking the right level of care at the right, you know, for what the patients need, then, and it may not always be physicians, and maybe we're finally starting to use, utilize our APPs at the right, the right levels. Keith A. Reynolds 17:37 Alrighty, I think that's all the questions I got for you today, Andy. Anything you want to add? Anything you think I'm overlooking? Speaker 1 17:44 No, I mean, I think stay tuned for 2026 as you mentioned with the RVU adjustment. I think baselines and metrics for 2026 are going to be a little wonky, and I'm looking forward to already as we launch our 2026 data set. I'm already looking forward to 2027 so it's always going to be interesting to watch kind of the baseline and the metrics move across the year, and I'll look forward to speaking with you again and talking more about it. Then, Keith A. Reynolds 18:09 absolutely, I'll be bugging you. Yeah, just I'll be bugging you, it's what I do. Alrighty, Andy, thank you so much. It's been a pleasure talking to you. Speaker 1 18:17 Thanks, Kate. Appreciate the time. Bye. once Austin Littrell 18:30 again, that was Andy Swanson, Chief Customer Success Officer at MGMA, speaking with Physicians Practice Managing Editor Keith Reynolds. And before we go, from all of us at Off the Chart, we'd like to wish you a happy and safe Fourth of July. We hope you're able to enjoy the long weekend. On behalf of the whole Medical Economics and Physicians Practice teams, I'd like to thank you for listening to the show, and as you please subscribe, so you don't miss the next episode. As always, be sure to check back on Monday and Thursday mornings for the latest conversations with experts, sharing strategies, stories, and solutions for your practice. You can find us by searching off the chart wherever you get your podcasts, and if you'd like the best stories that Medical Economics and Physicians Practice publish, delivered straight to your email six days of the week, subscribe to our newsletters at Medical economics.com and Physicians practice.com Off the chart, a Business of Medicine podcast is executive produced by Chris Mazzolini and Keith Reynolds, and produced by Allison Latrell. Medical Economics and Physicians Practice are both members of the MJH Life Sciences family. Thank you. Transcribed by https://otter.ai