Why we must keep the doors open for physician-owned practices


Independent physician practices formed the foundation of U.S. health care delivery for much of the 20th century, and while our numbers may have declined in recent years we still represent a vital touchpoint of medical care for millions of Americans. It is critical we take steps today to preserve private practice as a practice option for physicians, particularly amid the continued consolidation in health care.

The challenges my fellow physicians in independent practice and I face today—from increasing economic pressures to ever-growing administrative hassles—are significant. But so too is the resolve of the AMA to create a more sustainable health care model that fosters thriving private practices and enables the close relationship between patients and their physicians.

It starts with the AMA’s top advocacy priority: achieving Medicare physician payment reform.

The AMA is advocating for you

The AMA has achieved recent wins in 5 critical areas for physicians.

Inadequate payment is the top reason why independent physicians sell their practices to hospitals or health systems, according to the AMA Physician Practice Benchmark Survey. Because Medicare is a vital component of practice revenue, the fact that its physician payment  rate has plunged by nearly 30%, adjusted for inflation, since 2001 (PDF) places immense pressure on independent practices.

The lack of annual payment increases for physicians tied to the inflation rate stands in sharp contrast to the substantial boosts routinely awarded each year to hospitals, skilled nursing facilities and others who serve Medicare patients. The experience for physicians is just the opposite, as we must fight to reduce or delay round after round of payment cuts, year after year. The burden is even heavier for small private practices like mine, a six-physician otolaryngology practice in Louisville, Kentucky.

Of course, private payers are thoroughly familiar with the downward spiral of Medicare physician payment, and thus never hesitate to tie their own physician contracts to the Medicare payment schedule. In our practice, an insurance company that dominates the private payer market in our region offered us a contract renewal with payments based on 80% of the Medicare payment rate—and surgical rates below what they paid us six years earlier.

Our good-faith negotiations with that insurer went nowhere. My partners and I were caught up in the same type of squeeze play that private practices nationwide face constantly, in that we weren’t sure we could survive financially if we signed. But if we declined to renew, our patients would be harmed and we would still suffer financial consequences. Continuing consolidation in the health insurance industry is the larger issue at play here, but tying an annual update in Medicare physician payments to the rate of inflation will help reflect the true cost of providing care.

Ideally, Medicare payment reform should yield a system that is financially stable and predictable for both patients and physicians. The goal should be protecting value-based care while safeguarding access to high-quality care where it is needed most. Congress must ensure that Medicare can continue to play a critical role in the delivery of high-quality, affordable health care for so many of our country’s most at-risk patients.

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Another critical effort by the AMA and our partners in the Federation of Medicine is easing the tremendous burden posed by onerous prior authorization processes imposed by payers. You may recall the firsthand example I described recently, in which surgery was initially denied for a patient with a sinus tumor because an antibiotic and a nasal spray, both ineffective against a tumor, had not been tried. Our patients deserve better.

Following vigorous AMA advocacy efforts, the Centers for Medicare & Medicaid Services put forth a final rule earlier this year to increase the transparency of the prior authorization process for medical services and procedures under Medicare Advantage and other government-regulated health plans. This action will reduce delays in patient care as well as administrative burdens placed on physicians, while saving practices an estimated $15 billion over the next decade.

Private practices in general, and smaller practices in particular, will benefit from measures such as requiring health plans to offer prior authorization technology that integrates directly with electronic health records. An updated version of bipartisan and bicameral legislation to streamline and standardize prior authorization procedures within Medicare Advantage—the Improving Seniors’ Timely Access to Care Act of 2024—is pending before Congress and would codify many elements of the CMS regulation, as well as empower the agency to take additional steps to prevent care delays and improve transparency.

Members of the AMA House of Delegates are keenly aware of the need to reform prior authorization, and adopted new policies to bring greater prior authorization transparency and accountability on the part of payers during their Annual Meeting last month. 

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Another important issue is addressing the rise in physician burnout that is worsening our nation’s physician workforce shortage and has been a cornerstone of the AMA’s strategic work for more than a decade. We know that solutions must go beyond administrative simplification to establishing support systems that empower physicians to address their mental health needs without fearing negative career consequences.

We continue to urge state medical licensing bodies to remove questions on their applications that may deter physicians from seeking treatment for a mental illness or substance use disorders.

In the past two years, the AMA has worked closely with state medical societies, the Federation of State Medical Boards and the Dr. Lorna Breen Heroes’ Foundation to help remove stigmatizing mental health and substance-use disorder language on more than a dozen state medical board licensing applications; more than 25 state, regional and national hospitals and health systems credentialing applications; and secured positive policy changes from national organizations, including the National Association of Medical Staff Services and National Center for Quality Assurance.

Meanwhile, AMA advocacy backs legislation at the state and federal levels to secure additional funding and resources supporting the mental health needs of physicians. And we are proud to offer a broad range of resources to help physicians and their practices achieve well-being and greater resiliency, including open-access practice innovation strategies that are part of AMA STEPS Forward® and our Private Practice Simple Solutions series. You can also find a wealth of practical advice on starting and sustaining a private practice in the AMA Private Practice Playbook.

The AMA will always strive to preserve the integrity, independence and freedom of private practice for physicians who choose that environment to care for their patients. The challenges are many, but the rewards are plentiful. As the physicians’ powerful ally, the AMA is leading the charge to ensure private practice remains a sound and sustainable option for physicians nationwide.

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