Lawmakers Hear Grim Outlook From Private Practice Physicians on Rising Costs

Lawmakers heard testimony on May 23 from medical professionals about the strain on private practice physicians, which is causing a decrease in the quality of care for many Americans.

Almost 90 percent of medical groups reported an increase in operational costs in 2023, according to the Medical Group Management Association, and physician costs increased by more than 63 percent between 2013 to 2022.

As Mr. Buchanan pointed out, this makes it “harder to run a business, let alone own a practice, so how can we get doctors to afford to stay in private practice, with costs skyrocketing and reimbursement rates continuing to get cut?“ he asked. ”Many times physicians are forced to sell their practice or consolidate with a larger system to stay afloat.”

To make matters worse, Medicare’s formula for calculating physicians’ payments only went up 1.7 percent, adding more strain to doctors’ practices.

Ranking Member Rep. Lloyd Doggett (D-Texas) made similar statements, saying, “Today, over 70 percent of physicians are employed by a healthcare system or a corporate entity. This consolidation is creating greater obstacles for the few remaining independent practitioners who are struggling to compete.”

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However, he added that while he agreed that physicians are sometimes overregulated, private Medicare Advantage plans appear to be perpetrating the most aggressive interference in the doctor-patient relationship through “burdensome prior authorization requirements, step therapy, and other management tools intended to reduce unnecessary healthcare utilization, these tools often lead to delays and denials of urgent medical care.”

Dr. Timothy Richardson, a urologist at a 12-physician practice in Wichita, Kansas, appeared before the committee as a witness and offered similar sentiments about changes to fee schedules.

“One of the biggest things to keep us in business is just updating the [Medicare] Physician Fee Schedule so we can actually keep pace with the cost of running a practice,” Dr. Richardson said during the hearing about the collapse of private-practice medicine.

“Our employee overhead has gone up 30% in the last 2 years; our medical insurance goes up 10% to 20% every year. We literally just can’t keep pace with it, and we can’t keep hiring, so updating that fee schedule that keeps pace with that cost would be beneficial.”

Christine Kean, chief operating officer of a 41-physician orthopedics group in San Antonio, Texas, called the issue of prior authorization an “absolute disaster,” saying that, in her opinion, it does “absolutely nothing to improve care, but it does allow insurance carriers to deny care.”

“It is a billing game, because if you don’t have the prior authorization on the bill … then they can deny the care later, that you have already performed,” she noted. “So I think prior authorization is a really big thing.”

A number of the physicians who participated in the discussion stated that it was challenging to compete with practices that were owned by health systems due to the fact that Medicare pays a higher rate for services that are provided on a hospital campus.

Of additional concern to the doctors and advocacy groups is the issue of private equity groups buying out private practices, which, according to the testimony of Dr. Ashish Jha, dean of Brown University’s school of public health, frequently increases costs due to facility charges without offering any increase in the quality of care and, in some cases, prompts a decrease in patient safety.

“It just makes no sense to pay more for the same care in the same location just because the ownership of that practice has changed … vigorous enforcement of our existing antitrust laws is critical to ensure that we reduce market consolidation,” he said.