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Health Subcommittee Chairman Buchanan Opening Statement – Hearing on the Collapse of Private Practice: Examining the Challenges Facing Independent Medicine

May 22, 2024

“Compared to three decades ago, there are 30 percent fewer physicians in private practice…A thriving health care ecosystem should include a healthy balance of large health systems and local mom-and-pop practices.”

As prepared for delivery.

“Good morning. Thank you to the witnesses for being here today to discuss a crucial issue before us, the collapse of private practice and its impact on patients.

“Americans across the country are hurt by skyrocketing inflation from the past four years. I’m a former business owner, I know firsthand how inflation harms small businesses trying to benefit their community. Physicians are no different.

“Nearly 90 percent of medical groups reported increased operating costs last year. According to the Medical Group Management Association, physicians’ costs increased by over 63 percent from 2013-2022, making it harder to run their own practice. During that same timeframe, Medicare’s formula for calculating physician payments has increased by only 1.7 percent. In fact, adjusted for inflation in practice costs, Medicare physician pay rates plummeted 29 percent over the past two decades with large changes year over year. 

“So how can doctors afford to stay in private practice when their costs are skyrocketing, and their reimbursement rates continue to get cut? Many times, physicians are forced to sell their practice or consolidate with a larger system to stay afloat.

“Whether or not to sell a practice should be a choice by the physician based on what works best for them, their practice, and their patients. They should not be forced into practice consolidation. 

“Further, I am genuinely concerned that physicians are being transformed from entrepreneurs into employees. According to the American Medical Association (AMA), between 2012 and 2022 the share of physicians working in private practices fell by 13 percent. Compared to three decades ago, there are 30 percent fewer physicians in private practice. 

“A thriving health care ecosystem should include a healthy balance of large health systems and local mom and-pop practices.

“Back in my day, it was much easier and less expensive for young doctors coming out of medical school to start a practice in their hometown. Now, when I talk to young doctors coming out of medical school, many tell me it’s too expensive of an endeavor and they’d rather work for a larger system where they can collect a steady paycheck and not worry about the increasing administrative burden associated with owning a practice. 

“Another issue I continue to hear from our doc community is the growing rate of frivolous lawsuits against the medical community. AMA analysis shows that in 2019 medical liability premiums increased by about 27 percent, almost double the rate from 2018. Between 2020 and 2022, roughly 30 percent of premiums increased year-to-year. 

“I am extremely worried that pressure from the trial bar is causing our most experienced physicians to sell or retire early. 

“Finally, I’d like to talk about something that is near and dear to my heart: axing regulatory barriers that are contributing to physician burnout.

“Participating in Medicare’s physician quality system, MIPS, requires serious up-front capital, and complying with onerous reporting requirements can become a burden to independent practices. 

“In fact, a recent JAMA study found that it costs more than $12,000 and takes more than 200 hours to comply with MIPS. As a result, practices have to hire additional staff or contract with a third party to comply with these rules, which results in precious resources being spent on administration over providing patient care.

“For example, emergency physicians essentially have no other option to participate and report under measures in MIPS, which are burdensome and hinders their ability to improve the quality of care and reduce costs. The Large Urology Group Practice Association notes MIPS requirements have been shown to contribute to physician burnout and lead to early retirement.

“Our nation’s physicians should focus on the patient, not onerous, bureaucratic paperwork reporting requirements.

“Even amid certain yearly rate cuts, Medicare’s spending on physician services is projected to increase $22 billion over the next 10 years and total spending on Medicare outpatient services will increase by $500 billion in the same timeframe. Therefore, it is crucial that Congress pursues sustainable solutions to ensure predictable and practical payments to physicians and cut bureaucratic red tape.”