More than 100,000 doctors have left private practice and become employees of hospitals and other corporate entities since 2019. Today, nearly three in four physicians are employees of larger health care entities or other corporations — a record high.
As an independent physician, I know exactly why so many are making that choice. My four-doctor gastroenterology practice came under severe stress in 2007 due to catastrophic fee schedule cuts from our two largest payers. Luckily, I was able to join forces with other local independent docs to form a bigger group practice.
I value my independence and autonomy in the care of my patients, and could not imagine practicing medicine any other way. But not all physicians in my position are so fortunate. That’s why I’ve teamed up with other like-minded physicians to found the American Independent Medical Practice Association, a new group that advocates on behalf of independent physicians.
Disappearing independent docs ought to alarm patients and policymakers, too. Research shows that independent medical practices often deliver better outcomes for patients than hospitals. Physician-owned practices also often have lower per-patient costs, fewer preventable hospital admissions, and fewer readmissions than their larger hospital-owned counterparts.
Congress must ensure that it doesn’t further endanger the prospects for independent medicine.
The business of medicine is very different from how it was 40 years ago, when more than three in four doctors cared for patients in their own medical practices.
The cost of managing a medical practice — whether in primary care or a specialty — has surged. Labor costs, rent, and premiums for malpractice insurance have grown more expensive. Physicians have had to make significant investments in information technology and electronic health records.
Reimbursement rates from Medicare have not kept pace with higher operational costs. In fact, Medicare payments to doctors have declined more than 25% in the past two decades, after taking inflation into account.
That’s right. On a real basis, Medicare is paying doctors significantly less than it did 20 years ago.
In some medical specialties, the situation is even more dire. Payments for critical oncology services provided by community practices lag inflation by at least 28%, according to a recent analysis from the Community Oncology Alliance and Avalere Health.
Medicare reimbursement for other health care entities has risen steadily over that same period. Payment for inpatient and outpatient hospital services as well as skilled nursing has outpaced inflation since 2001.
Given these economic headwinds, many doctors have decided that they have no choice but to sell their practices, often to hospitals and large health systems. In doing so, the doctors lose autonomy. Patients lose the personal touch of care in their own doctor’s practice.
The growing consolidation of care within hospitals and large health systems is resulting in higher costs for not just those who are sick but those who are healthy. Facing less competition, hospitals and health systems can use their market power to demand higher rates from insurers.
Indeed, the average cost of employer-sponsored health insurance for a family is nearly $24,000 annually, a 22% increase over the past five years. Workers are responsible on average for more than $6,500 of that figure. And that doesn’t include copays or deductibles.
The landscape may become even less hospitable to independent physicians like me and my colleagues. Each year, the Centers for Medicare and Medicaid Services determines a formula by which physicians are reimbursed by Medicare — but this formula doesn’t take inflation into account. In fact, physicians are the only Medicare “provider” type without an annual inflation-based payment update.
As a result, a 3.4% cut to physician reimbursement took effect under Medicare on Jan. 1. That’s on top of a 2% pay cut that took effect last year.
Those cuts, and the uncertainty they engender on a yearly basis, make it hard for independent practices to plan for our long-term viability. We may not know if we’ll have the funds to hire and retain high-quality staff, invest in state-of-the-art technology and equipment, or spend the amount of time we’d like with patients.
In other words, cuts to Medicare reimbursement rates could drive yet more consolidation within the health care market. Independent practitioners may not be able to make our longstanding model work.
Lawmakers must take action and reduce or eliminate this year’s cut. Better yet, they could permanently index Medicare reimbursement for physicians to inflation. A bipartisan quartet of lawmakers in the House has introduced legislation that would do just that.
Doctors caring for patients in their own practices used to be the bedrock of our health care system — and for good reason. I’ve seen firsthand how the model enables patients to receive more personalized care and to build deeper and more trusting relationships with their doctors. And independent practices allow doctors to practice free of the rigid corporate guidelines and pressure to refer patients for procedures and other services at affiliated clinics that are common in consolidated health systems.
Patients and doctors deserve a system that puts their interests above hospitals’ and insurers’ bottom lines. Lawmakers can help create that system — by staving off cuts to physician reimbursement and indexing what Medicare pays doctors in the future to inflation.
Paul Berggreen is a gastroenterologist and president of the American Independent Medical Practice Association.