A few months into 2024 it’s become clear that economic challenges continue to swirl alarmingly around physicians, adding more uncertainty to the ever-volatile healthcare environment. Experts have painted a vivid picture of a sector under pressure, with the walls steadily closing in while the heroes try to escape – on one side are the federal government and consumers pushing for value, and on the other side are inflationary pressures from workforce shortages, high costs of labor and business, and the rising cost of pharmaceuticals (PwC).
In part two of our forecast, we address how the payer squeeze will impact traditional fee-for-service physicians already struggling to survive, and posit why the concierge medicine model provides much-needed protection from the storm clouds ahead.
Health insurers are navigating their own rough water in 2024 due to regulatory changes, demographic shifts and member preferences (McKinsey & Company). While hospitals and other health care providers have been dealing with elevated prices all along, those price increases didn’t immediately seep through to private health insurers whose financial contracts are often negotiated every few years (Money). Insurers’ costs are expected to increase this year, and are primed to keep climbing, fueled by pent-up demand post-Covid for elective and other medical procedures, as well as expensive new drugs.
Additional pressures are being felt from increased costs in Medicare Advantage, where inpatient and outpatient care utilization was higher than expected, increasing the medical-loss ratio. The Centers for Medicare and Medicaid Services (CMS) is cutting back on benchmark payments to payers, a situation that may worsen in 2025 with its new payment rates. While the extent and longevity of these trends is not yet known, industry exports predict that the aging of the Medicare population is likely to continue driving utilization, indicating this could be the new normal.
Insurers are responding in ways that continue to negatively impact physicians. These include raising premium prices, terminating contracts, delaying payments, reimbursing at values below the level of care provided, and showing an overall resistance to covering inflationary cost increases.
As independent Rochester-based physicians recently shared, the dwindling number of area doctors in private practice are in a virtually impossible financial situation, facing flat or declining insurance payments while overhead costs rise sharply (Rochester Beacon). Physicians there are dealing with subpar reimbursements from a large insurer whose control of more than 70% of the local market makes negotiations with them a take-it-or-leave-it proposition. A local gastroenterologist lamented: “As small business operators, private practice physicians are faced with continual, costly health insurance premium increases and high-deductible plans that put them in a double bind, squeezed between less than adequate payments by insurers and high costs to pay for their own health care.”
Added to this is the always-growing paperwork required to process insurance claims and resubmit claim denials. For many physicians, maximizing their payments from insurers has meant making costly investments in technology to boost operational efficiencies or hiring additional staff to manage administrative tasks (Medical Economics).
The Concierge Medicine Solution
Since 2002, Specialdocs has championed the alternate practice model of concierge medicine, inspired by a deep understanding of physicians’ declining personal and professional satisfaction in our dysfunctional healthcare system. The Specialdocs concierge medicine model is not subject to the volatility of payer reimbursements, but instead is sustained primarily through annual patient membership fees. In a fiercely competitive environment for healthcare providers, concierge medicine is unique in achieving the Quadruple Aim of value-based care by: providing personalized patient-centric care; reducing healthcare system costs with decreased need for patient ER visits; emphasizing both the management of chronic conditions and preventive medicine; and enabling physicians to practice independently, at the top of their license, and in the best interest of their patients.
Learn more about how converting to concierge medicine can benefit you, your staff and your patients: take the first STEP here.
Ready to see if you’re an ideal candidate for the Specialdocs concierge model?
If you’re looking to gain your independence to practice your best medicine for your patients and achieve a rare work-life balance, then consider taking our brief STEP form so that we may determine if you’re a good candidate for concierge medicine. Specialdocs is here to answer all your questions and guide you every step of the way towards building your concierge practice.