How CEOs Should Respond to Rising Physician Productivity, Pay

The trend of production spurring a rise in compensation 'is not sustainable,' says a new report.

To be paid more, physicians are ramping up their levels of production by seeing as many patients as possible.

In response, CEOs of provider organizations wanting to maintain a strong and sustainable workforce must adequately compensate their physicians, as well as find ways to give them more time back to avoid burnout and turnover.

Medical groups and healthcare organizations report an increase in pay of 3.6% for primary care specialties, 5.1% for medical specialties, 5.5% for surgical specialties, and 5.8% for radiology, anaesthesiology, and pathology specialties in 2023, according to a new AMGA report.

The 2024 Medical Group Compensation and Productivity Survey compiles data from 459 medical groups, representing over 189,000 providers from 197 physician, advanced practice clinician, and other provider specialties.

Compared to previous years, primary care experienced a modest rise in pay, whereas all other speciality types had relatively greater gains which aligned with their increase in productivity, measured in work RVU (wRVU).

The median compensation for the rollup of the top three primary care specialties (family medicine, internal medicine, and general pediatrics and adolescent medicine) jumped from $298,726 in 2023 to $311,666 in 2024, representing an increase of 4.3%. Meanwhile, productivity for these providers increased by 4.6%, resulting in a compensation/wRVU ratio with negative change.

"Net collections not keeping pace with necessary compensation growth is a significant challenge for the majority of groups in the country," said Fred Horton, president, AMGA Consulting, which administers the survey. "This issue, especially related to Medicare payment updates, must be addressed in order for organizations to afford necessary increases in compensation without continually relying on a need for providers to see more patients. If not addressed, many groups will soon be in a very challenging position in relation to work-life balance, burnout, and provider satisfaction.

"The big challenge is how to maintain a provider supply when you continually ask providers to do more to fund increases, rather than funding such increases with collections that keep pace with inflation. This trend of production driving increases in compensation is not sustainable." 

This means CEOs should be proactive about keeping their physicians happy. One of the most important ways to do that is by creating personal time for them to offset the extra time they spend seeing patients.

While many healthcare leaders recognize the value of investing in and implementing AI, it’s still an area that has room to grow. Technology like generative AI has great potential to target the administrative burden placed on physicians for tasks like documentation or responding to emails.

CEOs must also consider giving their physicians more autonomy and a bigger voice when it comes to clinical and administrative decisions. If physicians feel like they have a say in how they practice and how patients are cared for, they’re more likely to be personally invested in their work and feel an attachment to their organization.

Above all, however, leaders should ensure they’re compensating their physicians to the level of their production. Keeping labor costs down is a primary objective for provider organizations everywhere, but the expenses associated with replacing an exiting physician can far outweigh the increase in pay.

It may seem like a boost to the bottom line at the end of every quarter when your physicians are delivering at high levels, but overworked and underpaid doctors will eventually by costly for a CEO in the long run.