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AMGA: Medical Groups Generated a Profit in 2019, Health System-Affiliated Groups Posted a Loss

Analysis  |  By Jack O'Brien  
   December 23, 2020

Independent medical groups saw the profit per provider rise from $5,200 in 2018 to $12,434 in 2019.

Medical groups generated a profit in 2019, while health system-affiliated medical groups posted a loss, according to a survey released by the American Medical Group Association (AMGA) Tuesday.

For independent medical groups, the overall median profit/investment per provider last year was -22,208, an improvement compared to the -$57,426 median profit/investment per provider in 2018. Similarly, the study found that independent medical groups saw the profit per provider rise from $5,200 in 2018 to $12,434 in 2019.

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Meanwhile, health system-affiliated medical groups, posted an overall median loss per provider of -$163,994 last year, only a slight improvement on 2018.

"The numbers alone are not necessarily indicative of system-affiliated groups performing worse than independent groups," Fred Horton, M.H.A., president of AMGA Consulting, said in a statement. "One reason for these divergent trends is that revenue generated from ancillary services, such as scans and lab work, is reflected in the bottom line of independent medical groups, but generally does not accrue to the bottom line of groups affiliated with a system. Another reason is that certain expenses are exclusive to system-affiliated medical groups, for example, system office allocations and centralized service expense allocations. Because of these nuances, we analyze compensation and production alignment, staffing ratios, and general volume-adjusted metrics to make a more apples-to-apples comparison."

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Other key financial metrics analyzed in the study included the overall median per physician and median expense type as a percentage of overall clinic costs per physician.

For the former category, independent medical groups had an overall median per physician of -$32,985, an improvement from -$98,840 in 2018; health system-affiliated medical groups had an overall median loss/investment per physician of -$278,505 last year, marking a decline from -$225,261 in 2018.

Median expense type as a percentage of overall clinic costs per physician was broken down into three categories: provider compensation and benefits (61%), staff salaries and benefits (21%), and other operational expenses ($18%).

AMGA noted that the percentage of provider compensation and benefits increased 56% in 2018 and "creates a greater need for practices to be performing at optimal levels, given that the remaining percentage for staff salaries and benefits and operational expenses is shrinking."

In early September, an AMGA survey indicated that overall physician compensation increased 3.8% in 2019. 

Related: Physician Compensation Increased by 3.8% in 2019

Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.

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