A roadmap for practice profitability as expenses climb and revenue stays flat

Practice leaders looking for ways to offset rising costs may find some of the best answers inside their own organizations, a longtime Medical Group Management Association (MGMA) data expert said.

Comparing clinicians, exam rooms and business office results against one another and against the right outside benchmarks can reveal which staffing models, compensation plans and workflows are worth copying across a group.

“Can the highest producer mentor the other doctors on how their practice occurs, so they can see more patients more efficiently with better outcomes? … You may actually have stars in your system that are not being recognized,” said David N. Gans, M.S.H.A., FACMPE, an MGMA retired senior fellow.

Gans spoke Sept. 27 at the MGMA 2026 Annual Conference in San Antonio in a session titled “Best Practices to Improve Productivity and Profits.” A 45-year MGMA veteran who started as a student intern in 1980, he drew on MGMA DataDive figures comparing physician-owned multispecialty groups with those owned by hospitals and health systems.

He framed the session around strategy, the executive work of deciding what to change and why. Carrying it out is the job of managers.

“Tactics are when you go home and you go back and look and see what can you do to improve your organization,” Gans said.

How tough is the business climate?

In a June 2026 MGMA Stat poll of 251 respondents, 84% of medical groups reported higher operating costs than in 2025. A week later, only 47% of 221 respondents said revenue had increased, and 36% said it had dropped. In the most recent year of MGMA’s 15-year trend data, expenses outpaced revenue for physician-owned and hospital-owned groups alike.

The profit equation itself is simple, Gans said:

Revenue – operating cost = revenue after operating cost

Revenue after operating cost –provider compensation = net income or loss

Physician-owned groups typically distribute what remains to physicians at year’s end, largely for tax reasons, so their bottom line usually lands near zero. That leaves three levers:

• Produce more
• Produce at a lower cost
• Collect more of what the practice has already earned

How should you benchmark?

“Benchmark with caution,” one of Gans’ slides advised, for a number of reasons. No single metric explains performance, hospital-owned and independent practices have different cost structures, and a useful comparison requires drilling down to peers that look like your group. Practices differ, Gans acknowledged, with “different clinical styles, different office culture, and also different patient demographics.” Still, “they share the same fundamental business engines,” he said.

He grouped the key DataDive measures into three buckets:

• Productivity: work relative value units (wRVUs), the physician-work component of Medicare’s payment system, which is calculated the same way regardless of practice ownership.
• Efficiency and profit: total medical revenue after operating costs per full-time equivalent (FTE) physician; total operating cost as a percentage of revenue, often called overhead; and net income or loss per FTE physician, excluding financial support.
• Business operations: adjusted fee-for-service (FFS) collection percentage, accounts receivable (A/R) aging and payer mix.

Asked about comparisons by specialty and practice size, Gans acknowledged those differences and suggested MGMA’s data are sufficient to support specialty-level comparisons in many specialties.

Does your pay plan reward production?

In hospital-owned practices, the top quartile of primary care physicians produced more than 7,386 wRVUs, while the bottom quartile produced fewer than 4,167, according to MGMA’s 2026 DataDive Provider Compensation and Productivity report. The respective numbers for physician-owned practices had a slightly larger spread: 7,585 wRVUs vs. 4,165 wRVUs. Higher producers bring in more collections, and productivity-based compensation plans are associated with higher wRVUs.

“Do you have a compensation system that rewards those doctors who are working the hardest?” Gans asked. “Because if they're working harder, what happens to the bottom line in the practice? Collections go up, bottom line goes up. So, this is a critical element that says: Have we incentivized our physicians and other providers in our practice to reward those who work the hardest?”

Experience matters, too. Productivity tends to be strongest at midcareer, so Gans urged leaders to have a recruitment plan for replacing physicians who age out.

Are APPs and staff set up to succeed?

Physicians supported by advanced practice providers (APPs), such as nurse practitioners and physician assistants, produce more wRVUs. The payoff comes when APPs work to the full extent of their licenses, freeing physician time.

The most profitable quarter of hospital-owned groups had close to 0.8 APPs per physician, the highest of any quartile, and more support staff per physician. Those groups spent more on staff and space, but their revenue grew faster than those costs. Their operating costs equaled 48.3% of revenue, compared with 126.2% in the least profitable quartile, and they earned median net income of $291,294 per FTE physician.

Those APPs need the same kind of support as physicians, Gans said, and physical space can become a bottleneck.

“Also, from a primary care perspective, do you have sufficient examination rooms per doctor?” he asked.

Is money slipping through the business office?

Median adjusted FFS collection rates were 98.72% for physician-owned groups and 97.81% for hospital-owned groups. Gans put the gap at roughly $10,000 for every $1 million billed. Physician-owned groups also carried younger A/R, which is more collectible, even though their payer mix leaned more heavily on commercial insurance and Medicaid, which typically pay more slowly than Medicare.

Strong collection policies, payment up front, prior authorization and good payer contracting all help, Gans said. So does coding accurately.

“Because remember, the payer is going to pay what you bill within your payer contracts. So if you’re billing at a lesser amount, you’re going to get paid a lesser amount,” he said.

Artificial intelligence (AI) is starting to help as well, with the most immediate applications in the business office, Gans said .

What tactics are other groups using?

During the audience Q&A, attendees shared approaches of their own. One practice calculated how much revenue each exam room could generate per hour, then changed where patients complete paperwork, receive injections, get X-rays and pick up durable medical equipment (DME) to move them through rooms faster. Gans called room utilization a potential “choke point” and suggested running the same analysis by physician and APP.

To help patients accept APPs, attendees said, set expectations from the first call. One audience member described posting signs on the back of exam room doors describing its team approach to care, with physicians and APPs. Another described a nephrology practice that lost two of its five physicians; it now lets new patients choose between a sooner appointment with its physician assistant, using a physician-approved intake, or a later one with a physician. Once patients see an APP, many realize the clinician is qualified and often has more time to spend with them, the attendee said.

Attendees also noted that APP supervision rules vary by state and that pay models may differ by role, such as flat salaries for surgical physician assistants and productivity-based pay for others. One attendee urged leaders to weigh quality and patient safety alongside productivity. Gans agreed that APPs need the right skills and oversight.