The decline of private practice is on the minds of many healthcare leaders as reimbursement declines paired with rising practice costs are forcing some physicians to employed models.
Overall, physician reimbursement amounts per Medicare patient decreased around 2.3% between 2005 and 2021 when accounting for inflation, according to a new study from the Harvey L. Neiman Health Policy Institute.
CMS cut overall physician pay by 1.25% for 2024, updating the Medicare conversion factor to $32.74, a 3.4% decrease from 2023. These cuts will likely continue — in July, CMS released its annual proposed changes to the physician fee schedule for 2025, which includes a proposed 93 cent (2.8%) conversion factor decrease from 2024.
Quentin Durward, MD, a neurosurgeon at the Center for Neurosciences, Orthopaedics, & Spine in Dakota Dunes, S.D., told Becker's the cuts have created an environment where private practice is nearly impossible.
Editor's note: This response was edited lightly for clarity and length.
Question: What needs to change to mitigate the effects of pay cuts?
Dr. Quentin Durward: Medicare rates and cost of medical practice are misaligned. The reimbursements for a relative value unit, basically the cost of a certain procedure or office visit, have gone down while the costs of running the practice are way up.
That is creating, for many private practices, a massive financial crunch that literally cannot survive. And doctors are being driven into the employed system, where hospitals, academic or big groups, because they have a whole different reimbursement source, it's getting reimbursed completely differently than what doctor's professional fees generate. These hospitals can supplement the doctor's income to give them more than they make in private practice now. That's how the employment model keeps growing.