Here are three recent updates on the costs associated with healthcare that ASC leaders should monitor:
1. Medical groups are spending more per physician in 2023 than previous years.
A recent report by the American Medical Group Association found that the median expense per physician in 2023 increased from $905,283 to $1,036,238. Despite a slight uptick in revenue compared to the previous year, the median loss faced by medical groups per physician was $249,000. The AMGA attributed the increase to issues with ongoing labor shortages.
Compared to pre-pandemic levels, median total revenue per physician has increased 9.1%, while median total expense per physician increased 26.5% over the same period.
2. The cost of practicing medicine is rising.
Inflation — specifically in healthcare — continues to grow. The Medicare Economic Index, which measures medical practice cost inflation, increased 4.6% in 2023, the highest in the last 23 years. Despite this, CMS’ finalized fee schedule reduced overall physician pay by 1.25% and updated the conversion factor to $32.74, a 3.4% decrease over last year.
3. Some ASCs have had to spend one-quarter or more of their net operating revenue on employees to stay ahead of shortages.
The average percentage of operating revenue ASCs spent on paying employees was 21.3%, according to a report from VMG Health. However, the highest spenders paid 29% of their earnings to compensate staff.