Physician Practices

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 210,600 physician practices in the US consist of primary care and specialty practices. Primary care physicians are responsible for monitoring an individual’s overall medical care, performing physical exams, and treating minor illnesses. Primary care practices include general and family practices, internal medicine, pediatrics, and obstetrics/gynecology. Specialty practices focus on a particular area of medical care and may also perform surgeries to treat problems. Specialists include allergists, cardiologists, dermatologists, gastroenterologists, general surgeons, ophthalmologists, orthopedists, psychiatrists, and radiologists.

Lower Reimbursement Rates

Since only about 6% of patient visits are self-pay, physician practices are highly dependent on reimbursements from private insurance companies, Medicare, and Medicaid.

Hospital Affiliations

The past few years has seen an increase in hospitals purchasing physician practices to grow their revenues and medical staff.

Industry size & Structure

The typical physician practice has a single location, 16 employees, and about $3.2 million in annual revenue.

    • There are over 210,600 physician practices in the US with about $504 billion in revenue and over 2.5 million employees.
    • There are over 461,000 physicians working in office-based practices.
    • Over 860 million patient visits are made annually to physician practices.
    • There are two types of physicians - MD (Medical Doctor) and DO (Doctor of Osteopathic Medicine). Both are qualified to perform all types of treatment, including surgery, but DOs emphasize the body's musculoskeletal system, preventive medicine and holistic care.
    • Education and training requirements for physicians include 4 years of undergraduate school, 4 years of medical school, and 3 to 8 years of internship and residency. There are 143 accredited medical schools in the US for MD degrees and 41 accredited schools for DO degrees.
    • To practice medicine in the US, all physicians must pass either the United States Medical Licensing Exam (USMLE) for MDs or the Comprehensive Osteopathic Medical Licensing Exam (COMLEX) for DOs.
                                  Industry Forecast
                                  Physician Practices Industry Growth
                                  Source: Vertical IQ and Inforum

                                  Coronavirus Update

                                  May 4, 2022 - Revenue Increased During Q1
                                  • Net patient revenue per full-time-equivalent (FTE) physician increased 1% in Q1 2022 compared to the prior quarter and 9.6% year over year, according to Kaufman Hall. Physician productivity rose across all measures, with physician work relative value units per FTE up 7.4% quarter over quarter, 15.4% year over year and 20.2% compared to first quarter 2020. The increased productivity helped push physician compensation to its highest level in two years.
                                  • The maternal death rate in the US increased 18% year over year in 2020, according to a new report by the Centers for Disease Control and Prevention. Maternal mortality increased from 20.1 deaths per 100,000 live births in 2019 to 23.8 deaths in 2020. Covid in pregnancy can increase the risk of preterm delivery, blood clots, stillbirth, and preeclampsia, said Dr. Jason Melillo, an OhioHealth OB-GYN.
                                  • The US Department of Health & Human Services (HHS) has renewed the Public Health Emergency (PHE) declaration for COVID 19 through April 16, 2022. Medicare and Medicaid coverage of telehealth services was extended immediately. A public health emergency has existed since January 27, 2020. The PHE was renewed four times by former HHS Secretary Alex Azar and now by Becerra four times. PHE renewals keep in place flexibilities under Section 1135 waivers, such as the expanded use of telehealth. They also extend public aid programs. Industry experts say that waiver of cost-sharing for medical and behavioral telehealth services by health insurers is likely to be extended again by insurers who have done so for earlier PHE renewals. Industry stakeholders should remember that HHS retains the discretion to terminate the PHE at any time.
                                  • The US Supreme Court allowed a vaccine mandate to stand for medical facilities that take Medicare or Medicaid payments. "We agree with the Government that the [Health and Human Services] Secretary's rule falls within the authorities that Congress has conferred upon him," said the majority, writing that the rule "fits neatly within the language of the statute. After all, ensuring that providers take steps to avoid transmitting a dangerous virus to their patients is consistent with the fundamental principle of the medical profession: first, do no harm."
                                  • Medical experts warn that the 2021-22 flu season could be particularly severe, renewing fears of a potential “twindemic” with COVID-19 still spreading. Health officials are urging the public to get vaccinated against the flu as soon as possible. There may be more unknown factors than ever before, according to Dr. Bill Miller, senior associate dean of research and professor of epidemiology at Ohio State University's College of Public Health. The continuing COVID-19 pandemic is to blame, he added. Many experts say that the flu was essentially squashed during the 2020-21 flu season by masking and social distancing mandated to prevent the spread of the coronavirus.
                                  • The Department of Health and Human Services released in January more than $2 billion in Provider Relief Fund payments to 7,600 provider organizations facing financial shortcomings due to the COVID-19 pandemic. The money follows a December distribution of nearly $9 billion, with both falling under $17 billion fourth phase of the Health Resources and Services Administration’s (HRSA’s) relief program. In total, the federal government has distributed Phase 4 payments to over 74,000 providers across the US and its territories since December 2021, according to the agencies. These relief payments are also accompanied by $7.5 billion HRSA funds distributed to more than 43,000 rural providers since December 2021 as part of the American Rescue Plan.
                                  • The US Department of Health and Human Services (HHS) created an application portal for the Future Provider Relief Fund after America’s Physician Groups, an industry association representing physician practices, asked members of the US Congress in mid-2021 to increase distributions to physician practices struggling with the financial consequences of the COVID-19 pandemic. Some $9 billion distributed in December was part of a $25 billion funding allocation, leaving $16.5 billion to be distributed. The Fund was created via the CARES pandemic relief legislation passed in early 2020 to provide direct payments to healthcare providers experiencing lost revenues and added costs because of the pandemic.
                                  • Health insurance firms are sending mixed signals regarding payment for telehealth services, according to the nj.com news site. Some are rolling back liberal telehealth reimbursement policies that they launched at the start of the pandemic. UnitedHealth Group, Anthem, Cigna, and CVS Health all have increased some copays and adopted other rules that might cause some patients to delay or avoid telehealth visits unrelated to COVID-19. They also have imposed an array of deadlines, reimbursements and out-of-pocket expenses for telehealth, depending on the insurance plan. Countermeasures may already be under consideration. “Telemedicine has been a huge success. It’s not going away,” said Larry Downs, chief executive of the Medical Society of New Jersey, the state’s largest organization of physicians. “We think that it will be a permanent thing. The discussion and dialogue now is how do we finance it appropriately and ensure people have access.”
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