From pay cuts to workforce evolutions, 2024 was a tumultuous year for physicians.
Here are five pieces of good and bad news each for physicians:
The bad news
CMS cuts pay again
Amid rising industry concern about physician reimbursement declines, CMS finalized a 2.83% physician pay cut Nov. 1.
The 2025 Medicare Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System sets the physician fee schedule conversion factor for 2025 at $32.35, down from $33.29 in 2024.
"The CMS pay cut is a disgrace. As every industry in America is being forced to adjust their pricing due to the out of control inflation over the past two to three years, physicians are being hammered," Thomas Loftus, MD, neurosurgeon at the Austin (Texas) Neurosurgical Institute, told Becker's. "Not only are we not receiving inflation-adjusted increases in reimbursement, but the government is actually continuing to whittle away at our practice revenue overall."
The move follows a trend of declining physician pay. CMS cut overall physician pay by 1.25% for 2024, and, overall, physician reimbursement amounts per Medicare patient decreased around 2.3% between 2005 and 2021 when accounting for inflation, according to a study from the Harvey L. Neiman Health Policy Institute.
Payer challenges skyrocket
Denials of claims are increasing, along with the administrative burden of managing them. In 2024, 77% of respondents noted that payer policy changes are happening more frequently, up from 67% in 2022, according to Experian Health's "2024 State of Claims" survey. Additionally, 67% of respondents said reimbursement times are increasing in 2024, compared to 51% in 2022.
"We as physicians have very little, if any, opportunity to speak with payers. If we are lucky, I get to speak to a 'claims specialist' to argue about why I am not being paid," Ravi Krishnan, MD, an ophthalmologist at The Eye Institute of Corpus Christi (Texas) told Becker's. There is some so-called negotiation of the payment schedule beforehand, but as an owner of a small solo practice, I have very little bargaining power."
Payers are also challenging physicians' ability to secure reimbursements with prior authorization policies. Nearly 97% of providers have seen delays or denials for necessary patient care due to PA requirements, according to the Medical Group Management Association's 2023 "Regulatory Burden Report." Additionally, PA denials for outpatient care claims jumped 16% in the last three years.
Practice costs continue to rise
Physician practice costs have steadily climbed throughout 2024 and show no signs of slowing as the new year approaches.
The investment required to support a physician practice rose 8.8% year-over-year in October, reaching $332,887 per full-time equivalent physician, according to data from Strata Decision Technology. Median direct expenses per physician increased 9.8% year over year, hitting $1.1 million annually. Meanwhile, median net revenue per physician rose by 9.1% to $726,691.
Additionally, inflation, specifically in healthcare, continues to rise. The Medicare Economic Index, which measures medical practice cost inflation, increased 4.6% in 2023, the highest in the last 23 years.
"Many physicians face the challenge of effectively managing their practice's financial aspects," David Rosenfield, MD, anesthesiologist and interventional pain specialist at Peachtree City, Ga.-based Alliance Spine & Pain, told Becker's. "This includes dealing with insurance reimbursements, understanding complex billing codes and controlling operational costs. Every year, many of us find ourselves working harder and longer hours just to maintain our incomes. The costs of practicing medicine (rent, equipment, employee costs) continue to rise, while reimbursement often declines year over year."
Physician ownership plummets
The number of physicians in private practice is rapidly declining — around 108,700 physicians left private practice for employment between 2019 and 2021, according to a report from Avalere. In 2022, just 44% of physicians owned their practice, compared with 76% in the early 1980s, according to a report from the American Medical Association.
Many employed physicians are concerned with the way corporate ownership lessens their clinical autonomy. Around 61% of employed physicians said they have moderate or no autonomy to make referrals outside of their practice or ownership system, and 47% said they adjust patient treatment options to reduce costs based on practice policies or incentives, according to a survey from NORC at the University of Chicago.
"This one factor makes physicians vulnerable to the whims of large corporations," Loay Kabbani, MD, a vascular surgery specialist at Detroit-based Henry Ford Health, told Becker's. "As physicians become more and more employed, we lose control of our practice and our patient-physician relationships."
The rise in 'criminalized medicine'
State laws restricting aspects of practice, including abortions and gender-affirming care, have created confusion for many physicians as they try to identify the line between essential medicine and legality in a fast-moving political environment.
Caitlin Bernard, MD, an Indianapolis-based OB-GYN, spoke at the Association of American Medical Colleges' Annual Meeting on Nov. 11 about the legal consequences she faced after performing an abortion on a 10-year-old Ohio patient who had been raped. She summarized several cases where patients with life-threatening pregnancy complications were harmed or died because hospitals were unclear about permissible care under state laws.
Dr. Bernard noted that the "imprecise" wording of many laws, along with unclear guidance from medical organizations, has left physicians and lawyers confused about what procedures are legally allowed.
"People are not wanting to work in states where these laws exist. That's a big issue for OB-GYN now," Dr. Bernard said. "For example, we've had three maternity hospitals in northern Indiana close since our abortion ban went into effect, partly because of the difficulty in staffing them with physicians."
Additionally, Texas Attorney General Ken Paxton recently filed a third lawsuit against a physician providing gender-affirming care for transgender minors. The physician allegedly violated SB 14, a state law passed in September 2023 that prohibits "gender transition" medical interventions such as surgeries, puberty blockers and hormone replacement therapy for minors.
According to the American College of Physicians, more than 500 anti-LGBTQ+ bills were introduced in state legislatures in 2024. At least 112 of those bills have proposed restrictions in at least 40 states on gender-affirming care or transgender healthcare. While many of these restrictions have been legislative, administrative actions on the part of state governors are also being taken to restrict access to gender-affirming care in some states.
The good news
Prior authorization reform is rising
In 2024, 10 states passed laws reforming the prior authorization process, including Colorado, Illinois, Maine, Maryland, Minnesota, Mississippi, Oklahoma, Vermont, Virginia and Wyoming.
Some payers have also made moves to ease prior authorization burdens. On Oct. 1, UnitedHealthcare's national prior authorization gold-card program went into effect. The payer first announced the program in August, and debuted its list of eligible procedures Sept. 1.
Providers will not need to apply for the gold-card program, but they will have to meet certain eligibility requirements, including being in-network for at least one UnitedHealthcare commercial, individual exchange, Medicare Advantage or community (Medicaid) plan; meeting a minimum annual volume of at least 10 prior authorizations each year for two consecutive years across gold-card-eligible codes; and having a prior authorization approval rate of 92% or more across all gold-card eligible codes for each of the review years.
Providers that earn gold-card status are required to complete advance notification for services, but no clinical information will be requested.
Additionally, Blue Cross Blue Shield of Massachusetts removed 14,000 prior authorization requirements for home care services for its 2.6 million commercial members.
More prior authorization reform could be coming soon.
In its recently proposed reforms to the Medicare Advantage and Part D programs for 2026, CMS is looking to "address concerns about the overuse of prior authorization" by clearing up definitions for internal coverage criteria, creating stricter transparency requirements for payers, ensuring enrollees are informed about their rights to appeal and collecting more data on initial coverage decisions and appeals.
Additionally, a bipartisan group of legislators has also reintroduced the Improving Seniors' Timely Access to Care Act, which would reform prior authorization requirements in Medicare Advantage plans. ACG has developed an advocacy tool to support this legislation.
Some physicians are returning to private practice
While around 77% of physicians have shifted away from independent practice and into employed models over the last decade, some are growing unhappy with employment and are pivoting back to private practice.
According to consulting firm Bain & Co.'s "Frontline of Healthcare Survey," which was highlighted in an October blog post, nearly 25% of physicians in health system-led organizations are contemplating a change in employers, compared to just 14% in physician-led practices.
Some surgeons and physicians are choosing to leave employed models to regain this control. Benjamin Stein, MD, who co-founded and is chairman of ASC development group Capital Surgical Solutions, is one of those surgeons.
He was propelled toward independence after witnessing the changes at a former employer when the organization was bought out by a larger company. His new organization has seen a lot of success in both patient satisfaction and staff retention.
Dr. Stein has found that acceleration of practice acquisition has resulted in "a lot of mid-career physicians who are unhappy with their current situation," he said.
His new organization has seen a lot of success in both patient satisfaction and staff retention.
Other physicians have taken a similar path. Susan Baumgaertel, MD, an internal medicine physician in Seattle, worked and had ownership stake at The Polyclinic in Seattle, a multispecialty physician practice now owned by Optum, for 25 years.
As the practice grew, Dr. Baumgaertel felt an increasing lack of autonomy in her ability to make clinical or operational decisions in the best interest of her patients and staff, so she left The Polyclinic in 2021. Her new independent practice, myMDadvocate, serves as a multifaceted telemedicine and healthcare navigation hub.
More states ban noncompetes
Although the U.S. District Judge Ada Brown struck down the FTC's ban on noncompete agreements in August, calling it "unreasonably overboard without a reasonable explanation," many states have moved to reform noncompete laws.
Illinois, Iowa, Louisiana, Pennsylvania and Rhode Island have each passed bills to ban noncompete agreements.
- Illinois: Starting Jan. 1, noncompetes for licensed professionals who provide mental health services to veterans and first responders are unenforceable.
- Iowa: Healthcare technology platforms may not restrict the employment opportunities via a noncompete clause for independent nursing professionals.
- Louisiana: Starting Jan. 1, noncompetes restricting primary care physicians from practicing medicine will expire three years from the effective date of the agreement and new agreements or renewals cannot include a noncompete. If employment is terminated within three years, the scope of the noncompete must be limited to two years in duration and up to two contiguous parishes where the practice is located.
- Pennsylvania: Starting Jan. 1, noncompetes between healthcare practitioners and employers are limited to one year in duration and are unenforceable if the employee is dismissed by the employer. Healthcare practitioners include physicians, nurse anesthetists, nurse practitioners and physician assistants.
- Rhode Island: Noncompetes for advanced practice registered nurses are void and unenforceable.
Physician unionizing is on the rise
Unionization continues to gain traction among physicians as they seek representation at the bargaining table. Nationally, the number of medical residents in unions has grown from 17,000 to more than 32,000 in about three years, per CalMatters.
Since Oct. 1, three groups of physicians have made efforts to unionize. Medical residents and fellows at four Rhode Island hospitals affiliated with Brown University's Warren Alpert School of Medicine in Providence filed a Nov. 15 petition with the National Labor Relations Board to form a union.
Primary care physicians at Massachusetts General and Brigham Women's hospitals, both a part of Mass General Brigham in Boston, also filed a petition to unionize with the NLRB Nov. 15. Physicians cited burnout and increased "corporatization" as reasons driving the unionization effort. If the physicians vote to unionize, the bargaining unit would include 400 members, the largest union of attending physicians in Massachusetts.
Finally, residents at Philadelphia-based Penn Medicine, represented by the Committee of Interns and Residents, accepted their first union contract on Oct. 2. More than 99% of union members voted in favor of the contract after over a year of negotiations. The contract is the first of its kind for medical residents in the state, which includes a 25% salary increase, among other benefits.
Physician-owned hospitals could see restrictions lifted
Legislators are currently considering removing provisions in the ACA that limit expansion and opening of physician-owned hospitals. This policy shift, reported by Medscape on May 13, could significantly impact the landscape of physician-owned facilities.
Until 2010, physicians could own hospitals. However, the ACA closed a critical ownership exception, banning new POHs and limiting the expansion of existing ones. Only physician-owned hospitals that were grandfathered in at the time could continue to operate, but even these faced restrictions on growth.
Advocates argue that these hospitals offer significant benefits in terms of cost savings and patient outcomes, while opponents claim that they create an uneven playing field, as they contend that POHs primarily serve healthier, better-insured patients.