Physician productivity rises, but staffing and financial strains weigh on practices

Physician practices across the United States are working harder than ever, but financial and staffing pressures continue to undercut sustainability, according to Kaufman Hall’s latest Q2 2025 Physician Flash Report, which draws on data from more than 200,000 employed physicians and advanced practice providers across 100 specialties.

The new analysis shows that net patient revenue per provider full-time equivalent (FTE) climbed 4% year-over-year, reaching $404,116, while physician productivity—as measured by work relative value units (wRVUs)—jumped 6%. But these gains came at a cost: expenses per provider FTE rose 4% to $659,025, and median subsidies (losses) per physician FTE swelled to $317,409, an 8% increase over two years.

A widening gap between productivity and revenue

The report underscores a paradox: while doctors are performing more work, revenue per unit of work is declining. Net patient revenue per wRVU dipped 7% since 2023, falling to $76.63. Surgical and hospital-based specialties were hit hardest, reflecting an industry-wide push toward outpatient care—one accelerated during the pandemic.

That shift dovetails with broader policy and payment trends. The 2021 Medicare Physician Fee Schedule increased wRVUs for office-based evaluation and management codes, boosting productivity measures on paper but not necessarily translating into higher revenue. Meanwhile, commercial payers have been tightening reimbursement rates, leaving systems to absorb growing expense burdens.

Staffing squeeze

One of the most concerning indicators is the shrinking ratio of support staff to physician workload. Support staff per 10,000 provider wRVUs fell 13% in two years, to just 2.99. Kaufman Hall notes this decline likely reflects ongoing hiring and retention challenges, which could limit future growth if unchecked.

Industry analysts warn this trend feeds directly into physician burnout. A recent AMA survey found that nearly two-thirds of physicians report feeling burned out, with administrative overload and insufficient staffing as key drivers. Hospitals cutting back on support roles may inadvertently accelerate attrition, especially as health systems face a projected shortage of up to 86,000 physicians by 2036, according to the Association of American Medical Colleges.

Compensation pressures

Despite higher workloads, compensation growth has been modest. Median physician compensation per FTE rose 3% over the past year to $378,609. When adjusted for inflation, however, the increase represents a pay cut in real terms. Provider compensation per wRVU has actually fallen 2% over the past two years, reflecting a growing disconnect between work output and pay.

These pressures compound broader economic strains facing health systems. Kaufman Hall’s hospital margin reports have shown that more than half of hospitals ended 2024 with negative operating margins. As physician enterprises typically operate at a loss—subsidies exceeding $300,000 per FTE—the sustainability of the model is under growing scrutiny.

What’s at stake

The financial strain of physician enterprises is not new. Health systems have long justified operating losses by pointing to downstream revenue from surgeries, hospital admissions, and specialty referrals. But with payers shifting procedures outside hospital walls, that justification is eroding.

Some systems are experimenting with alternative models—such as partnering with private equity–backed physician groups or exploring capitation arrangements under value-based care contracts. But those paths carry their own risks, especially as regulators increase scrutiny of private equity in healthcare. The Federal Trade Commission recently opened an inquiry into private equity ownership of physician practices, citing concerns over consolidation and patient costs.

Outlook

The Q2 2025 data reinforces a picture of an overextended workforce caught in a financial vise. Physicians are doing more, but their organizations are spending more to sustain them while reimbursement fails to keep pace.

For now, practices are treading water—leaning on fewer staff, absorbing rising costs, and asking physicians to carry more of the load. Whether that balance can hold much longer remains an open question.