Corporate juggernauts are coming to dominate the U.S. healthcare system.
UnitedHealth now employs 10% of all physicians in the United States. Hospitals signed up more than 58,000 new physician employees and acquired nearly 5,000 private practices between 2019 and the end of 2021. Amazon and CVS are investing heavily in adding doctors to their payrolls.
The gradual disappearance of independent physician practices is not in patients’ interests. Policymakers must ensure that our healthcare system does not discriminate against independent practices — and unwittingly put them out of business.
The healthcare market has been consolidating for decades. As of 2021, more than half of doctors worked for hospitals or health systems, according to research conducted by Avalere Health for the Physicians Advocacy Institute.
Forty years ago, by contrast, roughly three-quarters of physicians worked in their own medical practices.
For doctors leaving private practice, employment can mean steadier pay, a larger corporate infrastructure to offer administrative support, and a source of new patient referrals.
But independent practice offers patients and the healthcare system many benefits.
Research shows that independent physician practices have more success getting patients to follow a prescribed treatment plan and post significantly lower rates of preventable hospital admissions and readmissions. Their patients also report higher levels of satisfaction.
One study from researchers at Harvard found that the differences in performance between health system-affiliated and non-system physicians were small. But health systems charged much higher prices for physician services — in some cases over 25% more.
Administrators of healthcare behemoths claim that consolidation allows for more efficient and cost-effective treatment for patients. But by buying up their competitors, hospitals and health systems have gained the market power to command higher prices.
There are several ways policymakers can ensure the viability of independent physician practices — and bring about a competitive marketplace that works to the advantage of patients.
First, Congress can fix the formula Medicare uses to pay doctors. When adjusted for inflation, Medicare reimbursement for physicians has sunk 30% since 2001.
Independent physicians’ costs haven’t decreased during that period. The cost of running a practice is up nearly 50%.
For comparison, Medicare reimbursement for hospitals has increased in line with inflation since 2001.
The combination of pay cuts, increased costs, and Medicare’s structural bias in favor of hospitals makes it harder for independent physicians to compete against hospital-owned facilities. Independent doctors deserve a level playing field.
Earlier this year, six senators — three Republicans and three Democrats — announced that they’d work on legislation that would “make changes to the current Medicare physician payment system to ensure financial stability for providers, improve patient outcomes, promote access to quality care, and incentivize the utilization of emerging health care technology.”
In the House, a bipartisan group of 82 members of Congress has endorsed a measure that would index physician pay under Medicare to inflation.
Approaches like these would help ensure that independent physician practices can continue to provide the high-quality, cost-efficient care patients are looking for — and push back against the broader consolidation trend that has taken hold in the healthcare market.
Dr. Paul Berggreen is Board Chair and President of the American Independent Medical Practice Association. He is also a gastroenterologist in Phoenix. This piece ran in the Las Vegas Review-Journal.
