MGMA testimony on protecting viability of independent practices (May 23, 2024)

May 23, 2024 
 

Re: MGMA Statement for the Record — House Committee on Ways and Means Subcommittee on Health Hearing, “The Collapse of Private Practice: Examining the Challenges Facing Independent Medicine”

Dear Chairman Buchanan and Ranking Member Doggett:

On behalf of our member medical group practices, the Medical Group Management Association (MGMA) would like to thank the Subcommittee for holding this important hearing on the challenges facing independent medicine. Numerous policies and extraneous factors coalesce to undermine the ability of independent medical groups to remain financially viable — cuts to Medicare reimbursement, staffing shortages across clinical and nonclinical positions, substantial administrative burden, inflation, and more. We appreciate the Subcommittee for examining policies that can help bolster independent practices who remain a bedrock of our healthcare system. 

With a membership of more than 60,000 medical practice administrators, executives, and leaders, MGMA represents more than 15,000 medical group practices ranging from small private medical practices to large national health systems representing more than 350,000 physicians. MGMA’s diverse membership uniquely situates us to offer the following policy recommendations.

Independent practices are vital to the communities they serve yet are rapidly becoming extinct. Over the past decade, physicians fed up with government overregulation, payer red-tape, and declining reimbursement have sold their practices to health systems, hospitals, insurers, and private equity firms at an alarming rate. They cannot survive as small businesses. Health systems can maintain reserves to weather the next economic storm. Most independent practices can’t carry cash reserves year-over-year or they would face double taxation. It’s common for hospital systems to run medical practices as a loss-leader, often at yearly losses in excess of $200,000 or more per FTE physician. They subsidize the shortfalls with more lucrative revenue from inpatient services, health insurance plans, and ancillary referrals. If many of these system-owned physician practices were run independent from non-ambulatory subsidies, they would quickly go out of business. This environment illustrates a broken system that forces independent practices to make difficult decisions about their ownership structure and erodes their ability to stay in operation.   

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