Financial and operational measures across the physician enterprise moved in different directions in the second quarter of 2025. According to a report by Kaufman Hall, net patient revenue per provider full-time equivalent (FTE) continued to rise year on year, yet revenue per unit of work softened for some surgical and hospital-based specialties. Productivity increased for both providers and physicians, while expenses and compensation also climbed. At the same time, support staff intensity fell relative to work generated, and the proportion of advanced practice providers (APPs) within the total provider workforce edged down. These shifts frame a quarter in which employed physician groups balanced growth in activity with persistent subsidies at the median and a cost base still dominated by labour.
Margins and Provider Mix
Median investment or subsidy levels remained elevated. The median subsidy per provider FTE reached $239,338 (€204,144) in Q2 2025, a 3% increase from $232,145 (€198,008) in Q2 2024 and up from $231,506 (€197,463) in Q2 2023. On a physician FTE basis, the median subsidy rose to $317,409 (€270,734), up 6% from $299,937 (€255,832) a year earlier and from $294,112 (€250,863) in Q2 2023. These figures reflect continued operating losses at the median for physician enterprises, despite rising revenue and productivity.
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The composition of the workforce shifted modestly. APPs accounted for 39.0% of total provider FTEs in Q2 2025, down from 40.4% in Q2 2024 and 40.2% in Q2 2023. Across specialty cohorts, APP representation varied, but the overall trend indicated a slight decline in APP share compared with both the prior year and two years earlier.
Subsidy patterns differed by specialty cohort, with distinct median loss levels for primary care, medical specialties, surgical specialties and hospital-based specialties. While the distribution varied, the overarching picture was consistent with overall results: enterprises continued to require substantial support to cover the gap between net patient service revenue and total expense.
Revenue and Productivity Dynamics
Revenue performance showed mixed signals depending on the lens used. Net patient revenue per provider FTE increased to a median of $404,116 (€344,691) in Q2 2025, up 4% from $389,040 (€331,832) in Q2 2024 and from $386,602 (€329,753) in Q2 2023. However, median net patient revenue per provider work relative value unit (wRVU) stood at $76.63 (€65.36) in Q2 2025, essentially unchanged versus $76.83 (€65.53) in Q2 2024 and below $82.61 (€70.46) in Q2 2023. Specialty-level data indicated a slight decrease in revenue per wRVU for surgical and hospital-based cohorts, consistent with a shift towards more outpatient care.
Productivity advanced on multiple measures. Median provider wRVUs per FTE rose to 5,030 in Q2 2025, up 4% from 4,845 in Q2 2024 and 11% from 4,539 in Q2 2023. Median physician wRVUs per physician FTE increased to 6,449, up 6% from 6,095 a year earlier and 12% from 5,742 in Q2 2023. The rise in wRVUs was not solely attributable to the 2021 changes to office-based evaluation and management code values, workforce activity contributed as physicians worked more, with corresponding increases in both revenue and expense.
Across specialties, productivity levels varied, with surgical and hospital-based cohorts typically generating higher wRVUs per physician FTE than primary care. Nevertheless, the aggregate trend was clear: enterprises produced more work relative to FTEs than in prior periods, supporting higher top-line results per provider while facing headwinds on realisation per unit of work in several cohorts.
Expenses, Compensation and Support Capacity
Costs continued to grow alongside activity. Median total direct expense per provider FTE reached $659,025 (€562,116) in Q2 2025, a 4% increase from $631,108 (€538,304) in Q2 2024 and up from $615,409 (€524,914) in Q2 2023. Labour remained the dominant component of cost, with median labour as a percent of total expense at 84.1% in Q2 2025, compared with 83.9% in Q2 2024 and 83.7% in Q2 2023.
Compensation tracked upward. Median provider compensation per FTE rose to $312,690 (€266,709) in Q2 2025, up 3% from $303,618 (€258,971) a year earlier and from €250,647 in Q2 2023. Median physician compensation per physician FTE increased to $378,609 (€322,935), also up 3% from $367,054 (€313,079) in Q2 2024 and from $355,992 (€303,644) in Q2 2023. On a per wRVU basis, median provider compensation was $62.93 (€53.68) in Q2 2025, slightly higher than $62.46 (€53.28) in Q2 2024, yet below the $64.46 (€54.98) level observed in Q2 2023.
Support infrastructure tightened relative to workload. Median support staff FTEs per 10,000 provider wRVUs fell to 2.99, down 3% from 3.10 in Q2 2024 and 13% from 3.45 in Q2 2023. Across specialty cohorts, support staff intensity also declined over the period. The sustained reduction in support staffing relative to work produced may indicate ongoing hiring or retention challenges, and it could become a constraint on future growth if not addressed.
The combined effect of rising expenses, higher compensation and slightly lower realisation per unit of work in some specialties underpinned the persistent need for subsidies at the median. While stronger productivity supported revenue per provider FTE, the cost structure and support constraints limited improvement in overall operating position.
The second quarter of 2025 marked a quarter of higher productivity, growing revenue per provider FTE and continued cost pressure. Revenue per wRVU softened in several specialty cohorts, suggesting a shift in care patterns that influenced realisation. Labour dominated the expense base and compensation rose, while support staff resources declined relative to work generated. With median subsidies increasing on both provider and physician bases, organisations will need to balance productivity gains with staffing capacity and expense control to sustain performance. For operational leaders and finance teams, the trends point to the importance of aligning provider effort, support resources and compensation structures to maintain access, throughput and financial stability.
Source: Kaufman Hall
Image Credit: Freepik
