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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.

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.

The January issue of the Physician Flash Report features the most up-to-date industry trends drawn from the same data physician groups use to track their finances and operations.

Physicians are operating at record-high levels of productivity compared to recent years but receiving less pay per unit of work. The median investment/subsidy per provider continues to increase, but the pace is slowing with only a 1% change from Q3 2022 to Q3 2023.

Physician and provider productivity is on the rise as patients increasingly seek care in ambulatory settings. However, increased revenue and productivity in Q2 was not enough to offset rising expenses as the median investment/subsidy per provider still rose 5% year-over-year to $224,243.

Physician and provider productivity is on the rise as patients continue to reengage and seek out care that was put off during the pandemic.