Primary care buckling as physicians struggle to remain independent, experts say

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Health care consolidation is making it difficult for independent physicians to remain so, but Congress has power to enact measures that would help, said the chief executive of the American Academy of Family Physicians (AAFP).

The U.S. health care market, price transparency, data availability, and more were part of discussion for the Senate’s Committee on Finance this month. On June 8, the Committee held the hearing “Consolidation and Corporate Ownership in Health Care: Trends and Impacts on Access, Quality, and Costs.”

There are a number of issues to examine: consumer confusion, vertical and horizontal consolidation among insurance companies, pharmacies, and health systems, and private equity investment, Committee Chairman Sen. Ron Wyden (D-Oregon) said in his opening statement. Committee Ranking Member Sen. Mike Crapo (R-Idaho) called for reforms to the Medicare physician payment system while preserving patient safety and improving access, especially for rural areas where hospitals have closed.

The Committee published the senators’ remarks and expert testimony online.

Primary care problems

Primary care is buckling due to systemic underinvestment, administrative burdens, and rising practice costs, AAFP Executive Vice President and CEO R. Shawn Martin said in his written testimony.

It is “increasingly challenging” to define “independent,” although physician ownership or control is at the core, Martin said. Since 2017, studies have shown more primary care physicians are working in organizations owned by hospitals or health care systems, and as of 2018, more than half of all physicians were affiliated with health systems, Martin said.

“Physicians are often forced to choose between the stability offered by health systems, payers, or other physician employers, and the autonomy and community focus of independent practice,” Martin said in the written testimony. “Increasingly, family physicians report that independent practice is simply unsustainable. The available evidence supports their experiences: our current environment is driving and rewarding consolidation while at the same time draining resources from primary care.”

Martin suggested a number of reforms that could help:

• In graduate medical education programs, forgiving student loans for physicians in primary care.
• Changing fee-for-service payment and the Medicare Physician Fee Schedule (MPFS). AAFP supports legislation that would provide an annual update to the MPFS based on the Medicare Economic Index. Physician payment has not kept pace with practice costs, Martin said, citing expenses for staff, space, and supplies.
• Raising Medicaid payment rates for primary care to Medicare levels.
• Providing the U.S. Centers for Medicare & Medicaid Innovation with authority and funding to support independent primary care practices entering value-based payment arrangements.
• Supporting site-neutral payment, billing transparency, and price transparency policies that support independent practices instead of incentivizing consolidation.

Problems with consolidations

Four other analysts proffered testimony about current market conditions.

U.S. health care spending in 2021 reached $4.3 trillion – larger than the gross domestic product of Germany, the fourth largest economy in the world, said Zack Cooper, PhD, an associate professor of public health and economics at Yale University.

As providers become increasingly concentrate, prices go up, but access goes down as consumers face larger insurance premiums and out-of-pocket costs, Cooper said. It is a burden on families and on the federal government, Cooper said. From 2000 to now, there have been more than 1,000 mergers among about 5,000 hospitals around the country and, while not inherently bad, evidence shows that is pushing up prices, he said.

Private equity

There is no “going back” to remove private equity (PE) investments in health care, said Karen E. Joynt Maddox, MD, MPH, an associate professor of medicine at Washington University in St. Louis School of Medicine.

But health care needs a modernized data system to measure ownership, costs, quality, and access. Measuring methods should not rely on claims or electronic health records, but should be streamlined and proactive, to stop insurance companies and hospital systems from outpacing the U.S. Centers for Medicare & Medicaid Services in data and strategy, Maddox said.

Value-based payments for population health also would help.

“The increasing corporatization of health care drives an even more urgent need to continue to shift payment towards population health,” Maddox said. “Rather than having the young, brilliant minds of the private equity firms around the country focus on ways to win at fee-for-service, they should be at work finding ways to win at population health management.”

Keep it local

Independent, community-owned hospitals can focus on the well-being of patients while lowering costs and improving access and care, said Chris Thomas, FACHE, president and CEO of Community Hospital of Grand Junction, Colorado. The hospital’s directors live in the community, the hospital partners with the local school district and university, and more than 90% of its construction investments stay within the county, Thomas said.

There is a need for more providers in primary care, Thomas said, noting a trend now is that physicians want to be employees of the hospital.

“The model of providers owning their own practices and doing the work to contract with each insurance company, to hire and maintain their own employees, and to maintain buildings, is no longer appealing to most physicians,” Thomas said.

Price up front

More usable data, including price transparency data, is vital for better, lower cost, and more accessible health care across the nation, said Caroline Pearson, executive director of the nonprofit Peterson Center on Healthcare.

Consumers, payers, providers, legislators, and regulators all would benefit, she said. Since 2021, hospitals have lagged complying with new federal rules to disclose prices of at least 300 “shoppable services,” consumers have little or no awareness of the requirements, and the data is incomplete, Pearson said.

But that data, “even in its imperfect form, is helping to improve the conditions for change,” Pearson said.

“Health care pricing data helps to identify poorly functioning markets, highlight areas where consolidation and other factors are increasing prices and, over time, can help invigorate and rebalance payer-provider negotiations to ultimately reduce costs for consumers,” Pearson said.