Physicians Abandoning Private Practices Amid Growing Overhead Costs

The trend of doctors leaving private practices is escalating in Austin and nationwide due to mounting overhead costs. Higher staffing costs, protracted negotiations with insurance providers, and an increase in the general cost of providing medical services have pushed many local doctors out of private practice.

Rise in Corporate-Owned Medical Practices

Data from the Physicians Advocacy Institute reveals a striking 59% increase in the number of corporate-owned practices in the southern United States between 2019 and 2020. The transition from privately-owned to corporate-owned practices appears to be significantly influenced by economic instability. Issues such as inflation, pay cuts, and delays by insurance companies in credentialing physicians brought additional financial strains.

Medicare and its Impact on Physicians’ Financial Struggles

Adjustments to the payment system have left physicians reliant on Medicare reimbursements in an arduous position. Data from the Texas Medical Association (TMA) shows a relative decrease of 29% in Medicare payments to physicians from 2001 to 2024, adjusting for inflation. Simultaneously, the annual costs related to maintaining a medical practice have consistently increased.

Difficulties for Private Practice

The declining Medicare reimbursement in juxtaposition with inflation has put many medical practices at risk. The growing age demographic of the population depending on Medicare, constant arguments for proper reimbursement with insurance companies, and escalating staffing costs, are some of the major threats forcing private doctors to consider retiring early, leaving the field, or merging with larger organizations.

Facing the Future

Economic problems are projected to have reverberating effects on all medical fields, especially on small rural practices. The anticipation of the continued trend is daunting with fewer doctors able to treat patients dependent on Medicare. The result could mean a decline in access to healthcare for a significant segment of the aging population.

Advocacy and Proposed Solutions

Proposed solutions for this burgeoning crisis include Congress passing the HR 6683 and HR 2474 bills. If enacted, the bills could halt the annual reduction in physician payments. The bills propose a boost in the payments under the Medicare physician fee schedule for 2024 by 4.62%. The current law only provides for a 1.25% rise. Furthermore, the HR 2474 bill could alter certain payment adjustments under the Medicare physician fee schedule to help address this issue.

The advocacy for these bills seeks to address the inherent flaws of the Medicare payment system. Ensuring a fair compensation for physicians is more than a matter of doctors’ profits—it’s about providing patients with the healthcare access they deserve.