The Impact of COVID-19 on Physician Compensation and Productivity Benchmarks

What Happened

The COVID‑19 pandemic has upended our lives in various ways. Terms such as “social distancing” entered the vernacular, virtual get-togethers and happy hours became the norm, and we were all urged to do our part to “flatten the curve.”

Frontline providers faced the brunt of the pandemic. Saving lives is in the job description for many physicians. Doing so in the face of a public health crisis of unprecedented scale likely wasn’t something providers had planned on. In the first months of the pandemic, our clients scrambled to develop compensation policies and make employment decisions, attempting to balance financial sustainability with retaining providers who risked their own health to care for patients. It seemed every organization we spoke to had a different story to tell and different problems to solve.

While the pandemic is not over, the most recent figures indicate that about half of all eligible adults in the US are fully vaccinated. The CDC has loosened its guidelines around mask usage for vaccinated individuals, and many states are beginning to ease restrictions. With life returning to some semblance of normalcy, now is a great time to reflect on what the initial data says about physician compensation and productivity during the pandemic.

Below, we detail some early figures from ECG’s Physician and APP Compensation Survey.

What the Data Is Saying

Preliminary data indicates that physician compensation stayed relatively flat last year, while productivity declined across various specialties. Some specialties experienced as much as a 50% reduction in productivity in April 2020.^[1] Many healthcare organizations did their best to keep physician compensation whole, even as many healthcare providers saw traditional volumes drop and scrambled to deal with influxes of patients diagnosed with COVID‑19.

Since compensation remained roughly the same and productivity declined, it also follows that the effective rate of compensation per WRVU increased. Current figures put these increases in compensation per WRVU between 6% and 10%. Further detail is provided in the table below.

Certain specialties were more affected than others. Medicine, the least affected specialty, saw productivity drop by 3.6%. Hospital-based, primary care, and surgical specialties all had productivity decrease by 5% or more.

Why This Is Important

For those who rely on the published market data, the drastic changes could have a large impact on many crucial decisions for healthcare organizations. Of note, healthcare organizations may be contractually obligated to update compensation per WRVU rates based on the new data, which could have significant financial implications under the published 2021 rates. The new data could also have a sizable impact on other types of decisions, including:

• Updating physician compensation structures.
• Valuing physician practices and medical groups.
• Evaluating professional service agreements.
• Reviewing reimbursement via payer contracts and arrangements.

What to Do Next

Several key questions arise out of the initial reports: Is this a one-year aberration or a sign of things to come? How do we best use the new, pandemic-affected data? How will virtual care stabilize over time? As practice profiles change and 2021 Medicare Physician Fee Schedule (MPFS) RVUs are adopted, when will the benchmarks stabilize?

As we wait to see how far reaching the impacts of the pandemic are, organizations will need to rely on their best judgment in terms of how to use the new physician compensation and productivity data. Depending on the circumstances, relying on pre-COVID figures may be appropriate, particularly where updated benchmark data has experienced significant volatility from prior years. In other cases, it may make more sense to use the most recent data.

Published June 14, 2021