A New Bill Can Help Fix That

Medicare is failing patients and physicians. After adjusting for inflation, physician reimbursement under Medicare has declined by 33% from 2001 to 2025, according to the American Medical Association. Over the same period, Medicare payments to hospitals surged by nearly 60% while hospital executive salary has also skyrocketed 93% over a decade.

How can private practice physicians stay in business to continue providing care for patients? Physicians are bracing for yet another 6% reduction in take home pay this year.

A recently proposed bill, the Medicare Patient Access and Practice Stabilization Act co-sponsored by Congressman Gregory Murphy M.D (R-NC) Congressman James Panetta (D-CA) and eight other House members seeks to address this issue. The bill aims to reverse the Medicare cut to physician pay and, more importantly, align physician reimbursement with inflation, ensuring continued access to care for Medicare patients.

If Doctors Can’t Keep Their Doors Open Where Will Their Patients Go?

The stories are common. In September 2024, an obstetrics and gynecology practice that had served a Michigan community for 74 years shut its doors. In November 2024, a Florida-based private equity firm sold a New York dermatology practice to another private equity firm. In December 2024, Becker’s Review published a list of 22 physician practices that were forced to close.

On February 7, 2025 a well-respected multidisciplinary orthopedic group that has been caring for Alabama patients for nearly 30 years announced its upcoming closure. The group has treated tens of thousands of Alabama residents. When explaining the reasons for the closure, the CEO’s announcement in a public statement was clear: “We find ourselves in a unique situation—one that many groups across the country are facing and one that is increasingly difficult to navigate: balancing costs while planning for attrition. With doctor shortages, rising operational expenses, and reimbursement cuts, many surgical and non-surgical specialties alike are feeling immense pressure.”

Alarmingly, 85% of physicians under the age of 40 are now employed rather than independently practicing, primarily working for hospitals and insurance companies. However, multiple studies indicate that this trend of ownership and vertical integration through mergers and acquisitions has neither improved the quality of care nor reduced costs.

Decreasing Medicare Reimbursement Impacts Patient Access

As operational costs continue to rise—including rent, staff salaries, health insurance for employees and malpractice premiums—physicians are being compensated less for their services.

These cuts directly impact patient access to care.

Private insurance sets its reimbursement rates using Medicare as a benchmark, albeit at a higher rate. On average, private insurers pay physicians approximately 43% more than Medicare. If Medicare reimburses $100 for a procedure or surgery, private insurance typically will pay $143.

The Financial Reality For Physicians

In any business, who can afford to do more work for less pay? This financial imbalance is one reason elderly patients struggle to secure doctor’s appointments. The disparity discourages physicians from accepting Medicare patients—an issue that is even more pressing for Medicaid recipients.

To remain financially viable, physicians must either see more (preferably privately insured) patients or develop alternative income streams, such as investing in imaging technology (X-ray, MRI) or offering cash-based elective services like dermatological skincare treatments or light-adjustable lenses (LALs) in ophthalmology.

The alternative, of course, is to become an employee by selling the practice to a hospital, insurance company or private equity firm. This shift reduces competition and limits patient choice. It also increases healthcare costs for society as a whole.

Decreasing Medicare Reimbursement Causes Healthcare Consolidation

Medicare was established with a laudable objective: to provide elderly Americans with access to medical care while shielding them from the vicissitudes of private insurance markets. However, it has evolved into a bloated bureaucratic system with unintended consequences.

The erosion of independent physician practices is accelerating—and this is by design. As private practices disappear, patients face fewer choices while hospitals and insurance companies gain greater control over regional healthcare delivery. This issue is further exacerbated by the consolidation of hospitals within local markets.

Does Healthcare Consolidation Help Patients?

The allocation of scarce and finite resources is complicated.

For example, in spinal deformity surgery, revision rates for complex cases hover around 20%. Proven techniques, technologies, and biologics can significantly reduce these rates, but they come at a high cost. As a physician, my duty is to ensure the best possible outcome for my patients. I must look patients and their families in the eye, assuring them that I am doing everything within my power to optimize their care. If complications arise, I share in that burden—not just professionally but personally. Living through complications alongside our patients and their families is incredibly difficult. Hospital administrators have to make difficult decisions about resource utilization. However, they are not accountable to the patients for complications or revision surgeries. Instead, scrutiny from patients, families, social media and even the surgeon themselves is directed solely at the surgeon.

Hospital administrators, on the other hand, face a different challenge: managing trade-offs while overseeing a complex healthcare enterprise. For hospitals, these cases often come down to short-term economic calculations, with decisions driven by cyclical financial metrics.

Expensive products may decrease margins. Paradoxically, hospitals may even profit from revision surgeries, as they generate additional billable procedures.

While hospitals do not intentionally track individual clinical indications for cases, they typically record an increase in case volume.

Conversely, when financial metrics are not met and a hospital faces financial distress or bankruptcy, the scrutiny falls on administrators rather than surgeons, who are held accountable by the board of trustees, financial stakeholders, and the public.

A proper balance of competitive forces is crucial. However, excessive ownership consolidation in the marketplace can diminish these forces, potentially leading to negative consequences for patient care and long-term financial sustainability.

This Bill Levels The Playing Field

The Medicare Patient Access and Practice Stabilization Act aims to protect physicians and maintain patient access to care.

Starting January 1, 2025, a 2.83% Medicare reimbursement cut took effect. With practice costs simultaneously rising by 3.6%, this effectively results in a 6.43% reduction in physician compensation.

“Doctors in America are facing unprecedented challenges due to ongoing Medicare cuts, putting millions of seniors at risk of losing access to affordable, quality healthcare,” stated Congressman Gregory Murphy (R-NC).

As a physician himself, Murphy understands the crisis firsthand. “This issue is causing many to retire early, stop taking new patients, or sell their practices to large hospital systems, private equity firms, or insurance companies—where the cost of care is higher and the quality of care lower.”

This bipartisan bill directly addresses these challenges: “My legislation halts this year’s Medicare Physician Fee Schedule cut and increases payments by 2% to account for inflationary pressures.”

It is a much-needed intervention.

Private Practice Physicians Are Feeling The Pressure

Dr. Christopher Storey, a private practice neurosurgeon at Nashville Neurosurgery Associates in Tennessee, faces significant challenges: “As a private practice neurosurgeon, I must navigate the financial realities of running a practice. From 2019 to 2023, our practice experienced a total cost increase of 22.3%. Meanwhile, reimbursement adjustments decreased by 5.6% for the same services performed during that period.”

This situation is frustrating as Dr. Storey emphasizes the cost-saving potential of private practice for patients and the need for site-neutral payments: “Private practice plays a crucial role in reducing healthcare costs. For example, a spinal cord stimulator procedure can be performed in an office setting, where the fee is limited to under $2,100 for the first lead. In this scenario, the physician assumes all financial risk for the procedure. However, when the same procedure is performed at an ambulatory surgery center, the cost can rise to nearly $5,500. In an outpatient hospital setting, the cost can exceed $6,800, while the physician’s reimbursement makes up only $400 of that cost.”

Surgeons are not the only ones feeling the pressure.

Dr. W. Curry McEvoy, a private-practice oncologist at the Southern Cancer Center in Alabama, highlights the precarious position of independent practitioners: “Without access to the same benefits that hospitals receive, private practices are feeling the squeeze and are often forced to consider drastic options to stay afloat, including merging with hospitals. The loss of independent practices is bad news for patients, who end up paying significantly more for hospital-based care, and for physicians, who report a loss of autonomy in the hospital setting.”

Dr. McEvoy also points out the systematic exploitation of the 340B Drug Pricing Program by large hospital systems, which manipulate the program to maximize profit rather than expand care.

Data shows that much of the 340B program’s expansion has occurred in affluent communities, far from the vulnerable populations it was intended to help.

Dr. McEvoy captures the frustration felt by many independent oncologists. “For years, independent oncology practices like ours have been forced to compete on an unlevel playing field with large hospital systems, which receive higher reimbursements and access to drug discounts under the 340B Drug Pricing Program.”

The Future of Medicare and Patient Care

Medicare is failing patients, and the current path is unsustainable. The program’s reimbursement policies devalue physician services, push independent doctors into hospital employment, and create access barriers for patients. Healthcare system consolidation has not delivered better or more cost-effective care.

The Medicare Patient Access and Practice Stabilization Act is a crucial step in reversing these trends. By stabilizing physician reimbursement and reducing incentives for unchecked consolidation, this bill protects practitioners and the patients they serve.