Physicians and advanced practice providers saw improved margins and higher revenues than ever before, but the gains are tied to their output and productivity rather than how much they’re being paid for their work, according to a new quarterly snapshot.
From the second quarter of 2023 to the same period in 2025, the median net gain per employed physicians rose by 8% and for providers (both physicians and advanced practice providers) by 3%, according to the data healthcare advisory firm Kaufman Hall pulls from nearly 200,000 providers for its reports.
During that same window, median revenue per provider unit of work (wRVU, a metric of productivity relative to work volume) increased by 12% for physicians and 11% for all employed providers. Though that let to a 5% increase in median net patient revenue per full-time provider, median net patient revenue per provider wRVU declined 7%.
In other words, employed providers are bringing in more money, but having to complete more work to do so. This also comes as the median total direct expense per full-time provider rose 7% and median provider compensation rose 6% over the two-year period.
“Revenue has increased because physicians and providers are working more, but the data also show that reimbursement is not keeping pace,” Matthew Bates, managing director and physician enterprise service line leader at Kaufman Hall, said in a release. “In the coming months if more patients lose insurance coverage, this trend will likely get worse.”
Kaufman Hall reported smaller absolute changes across the metrics when measuring the second quarter of 2025 against that of 2024. The exception of median net patient revenue per provider wRVU staying roughly flat rather than declining, suggesting that much of the negative productivity-to-revenue trend occurred between 2023 and 2024. That’s still a concern, considering other areas like per-provider total direct expense continued to rise in the past year.
Also of note was an ongoing decline in support staffing levels. Measured in relation to providers’ output, Kaufman Hall recorded a 13% decline over two years and a 3% dip since last year, which the firm said could reflect continued staffing challenges and “could become a hindrance to future growth."
Kaufman Hall’s numbers come amid ongoing Medicare reimbursement declines for doctors and add fuel to concerns that failing to bump up rates will continue the trend of practice sell-offs.
Hospital margins, outpatient revenues rise in June
Landing alongside the provider report was Kaufman Hall’s monthly look at hospital operations, which outlined stronger margins and revenues in June.
The firm’s operating margin index of nationwide hospitals was 3% across four months when including health system allocations for the cost of shared services and 6.6% when excluding those. That’s a 3% improvement in year-to-date operating margin compared to the first five months of 2024. Single-month operating margins also rose 5% compared to May.
Discharges and adjusted discharges dipped a percent from May, but from the prior year are up 3% and 5%, respectively. Meanwhile, hospital revenues rose month to month as well as year over year—particularly in the outpatient setting—and also increased on a volume-adjusted basis. Expenses rose to a lesser extent, with nonlabor expenses and purchased services driving much of the volume-adjusted gain.
“Higher performing hospitals are nimbler on both the revenue and expense sides,” Erik Swanson, managing director and data and analytics group leader with Kaufman Hall, said of the trends. “They may be expanding their outpatient footprint, diversifying services or managing expenses like purchased services by centralizing some functions. They are also more likely to have value-based care or bundled care arrangements in place.”
Kaufman Hall’s hospitals report pulls data from more than 1,300 hospitals. It and the physician report rely on data from Strata Decision Technology.