Is the physician employment model broken?

Revenue and expense data from the last year could point to a need for to reconsider the traditional physician employment model, according to Kaufman Hall’s “Physician Flash Report for 2023.”

Here are three takeaways and three action steps, according to the report.

Takeaways:

1. Investment per provider is up 7% since 2021.

2. Revenue is up, but expenses are increasing at a faster rate. Labor is 83.9% of total expenses.

3. Compensation is the driver of labor expenses, with provider pay up 9% compared to 2021.

Action steps:

1. Expenses need to come down — the report suggests adopting new pay models that reward efficiency or leveraging advanced practice providers.

2. Hospitals need to analyze where their profitability has changed before rethinking models.

3. When rethinking models, hospitals and health systems should examine how physician employment is linked to organizational strategy.