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Compensation is not keeping pace with physician productivity, while patient demand continues to rise and the proportion of advanced practice providers expands across the workforce.

The median investment/subsidy per provider plateaued this quarter, however the distribution between higher and lower performing practices is wide.

Net patient revenue per provider increased overall, and physician productivity continues to rise.

Two out of every five healthcare providers—just over 40%—in the United States are now non-physician, advanced practice providers.

In the fourth quarter of 2024, the median investment/subsidy per physician was $306,792, an increase of 5% compared to Q4 2023.

In the third quarter of this year, the median investment/subsidy per physician was $304,312—rising above $300,000 for the first time. Other expense metrics such as the total direct expense per provider FTE and labor as a percentage of total expenses increased.

Health systems are confronting a new normal of shrinking revenue and rising labor costs. In the second quarter of 2024, increased labor expenses accounted for 83.9% of total expenses. Additionally, the median investment/subsidy per provider rose 3% since Q2 2023.

A judge orders a partial, preliminary injunction of the FTC’s noncompete ban, Sanford Health and Marshfield Clinic announce plans to combine, and CMS proposes a nearly 3% cut to Medicare physician pay for 2025.

Using the latest data forecast from Sg2, a Vizient company, the graphic below illustrates how the outpatient shift will continue to accelerate through 2034.

Artificial intelligence can provide the tool necessary to untangle complex healthcare agreements and contracts. In academic healthcare, this can support efforts to restore a funds flow model to what has been legally agreed to or negotiate a new funds flow agreement.

Overall labor expenses and revenue continue to rise, and Q1 2024 data show that labor represented 84% of total expenses. The median investment/subsidy per provider increased 2% compared to Q1 2023.