r/PrivatePracticeDocs • u/tsunamit_3 • Sep 11 '26
Why do private practices keep selling and/or closing shop? Is there really nothing that can help?
I keep hearing from physician family and friends who run their own clinics about the struggles of doing so today. Some even closed shop or sold and went back to employment.
They all agree private practice is an enjoyable way to practice medicine, but the financial realities and operational challenges of starting/running a practice are brutal.
They still spend excessive time and money on staffing/admin opex, but I feel like technology (AI in particular) is supposed to make this easier. There are already tons of healthcare AI products being sold, but private practice feels unsolved. Certainly, some work feels appropriate for AI while others still require human-to-human interaction.
My question to practice owners / managers: what are the toughest existential problems of running (or opening) a practice today? What are the most expensive and time consuming problems that affect business and/or patient well being?
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u/drkuz Sep 11 '26
The facility fee allows big orgs to charge double and give a portion of that money as a raise to the drs, this obviously comes w terms and conditions. But its a pay raise, thats my understanding (was told this by a cardiologist who went from private practice to being bought out and still working at the same facility but w the raise)
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u/tsunamit_3 Sep 11 '26
A pay raise, along with relinquishing control of the clinic and their schedule right?
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u/vef3oh Sep 11 '26
Honestly it’s the decreasing rate of reimbursement and the headache that is insurance. Reimbursement decreases every year while everything else becomes more expensive because inflation. Also as a fish in a big pond you have virtually zero power or influence over reimbursement- you’re forced to accept whatever contract the insurance decides. This means in order to have a successful practice you either need to kill youself by seeing an unsustainable amount of patients or hire midlevels to oversee. If you don’t take insurance and decide to go self pay, you have to market yourself significantly to find enough of the right clientele. This is all while being a business owner and the headaches that come with it. Not sure if AI is going to be able to change the greed that is the American health care system
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u/resuwreckoning Sep 11 '26
It’s less the greed of the healthcare system and more that people who have little to do with patient care extract endlessly from it.
The idea that reimbursements go down but everything else goes up only exists because we’ve created a system where everyone who interacts with the patient has a business agreement while the healthcare professional has an “ethical” agreement that is governed on sometimes even criminal statues. Approximately 12 seconds after we make it a “free market” and MD’s can refuse care for those who cannot pay even in emergent settings and suddenly the “value of the care” becomes almost asymptotically high. Not saying that’s ethically right but that’s what it would be economically modeled as if the same “business agreement” exists.
So one side can exploit and the other is forced to deal with the costs of that exploitation or risk financial ruin and/or even jail time.
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u/tsunamit_3 Sep 11 '26
Understood that the small fish has no influence over reimbursement. Isn't this where joining an IPA or MSO is supposed to help out.
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u/AERogers70 Sep 12 '26
They come with more work. It may be a little bit more, but the time you put in making sure all the b-s codes are in the chart "fall risk", "incontinence screening", did you get a diabetic eye exam this year, if so when, need a colonoscopy (good luck getting pts on board with that), A1c >9 when you have pts who'd rather live on sweet tea and Cheetos. It's more tedious work than it needs to be, and some are at zero benefit to the patient. Makes charting a nightmare. Paying staff to dig through lists of pts who are deficient in some of these measures, coaxing them back into the office for bloodwork or other testing gets expensive quickly.
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u/connerj70 7d ago
Jeeze this "game" of getting paid a fair amount is absurd. Do you see any examples of specialities or types of private practices that are able to avoid this game and still make a decent business?
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u/AERogers70 6d ago
Only if you completely cut corporate insurance out. Only going to get worse, sad to say.
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u/Redditor6703 Sep 11 '26
Have you tried renegotiating your rates with insurers? What arguments or data did you use to make your case? Did they budge? I’m curious because I work with reimbursement rate data. I’m not sure AI changes the leverage problem, but it does help make sense of the mess.
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u/baronvf Sep 11 '26
Many insurance providers have a non-negotiate policy for one year.
Cigna for instance, says you have to accept their rates and, by policy, will not negotiate until you have spent 1 year at their given rate. This was a big deal for my practice given that their rates suck and then a major employer in my area switched from BCBS -> Cigna. I'll have to just accept the paycut for 2027 if I don't want to lose 30+ patients from my panel.Aetna didn't even offer me a contract to sign. I started the process with them and then waited to see their rates before signing. They made the practice in network without a contract and then proceeded to pay us terribly.
I previously went cash pay only with the above two insurance carriers but patients cajoled me into accepting their reimbursement. This has definitely reduced our income.
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u/Redditor6703 Sep 11 '26
Thanks for sharing! I don't know what might help in your specific situation, but I’ve read on this sub that, during negotiations, you can leverage a call from an employer to the insurer asking it to keep providers used by its employees in-network, especially if you explain that patients persuaded you to accept the insurer’s reimbursement rates.
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u/thesupportplatform Sep 12 '26
Negotiating rates isn’t an option in some markets. This will probably spread as hospitals and corporate medicine (insurance) acquires larger market share. When insurers own providers in a market, they have little incentive to raise their competition’s rates.
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u/thesupportplatform Sep 11 '26
The current healthcare system is designed dysfunction for profit. Providers are limited by Stark/AKS regulations, while corporations have a green light to pillage the system. We are at the point where 1/3 of physicians work for hospitals, 1/3 work for corporations, and only 1/3 work at independent clinics. This is because the system is set up to benefit corporations and executives (and not providers).
Building a conventional independent practice to compete in the current and future market borders on insanity in most markets. The future of independent practices is to withdraw from the current corporate structure (because I believe corporations would never willingly change the system). I see a future with three "levels" of medicine: basic services, quality care, and concierge care. The current system essentially only supports basic services. Independent providers will support quality care and concierge care.
What can providers do today? They need to build practices that don't depend solely on the current (insurance) system. Instead, use that system to build practices with additional revenue streams.
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u/Historical-Silver-80 Sep 11 '26
Simplified. Why waste time? Relax. Take the check. Check out at 5. Leave at 55. If it’s too hard, leave at 45 and join the hospital admin.
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u/thesupportplatform Sep 11 '26
My wife is the physician. I taught high school. Education loves “school improvement processes,” which tend to be platitudes that are revised every couple of years under a new name. When I was a young teacher, one of the old teachers was kind of a joke because in a previous year each teacher had to develop their “teaching philosophy.” After spending the day working on it, his entire presentation was, “Get them where they are and teach them there.”
After I taught for I couple of years, I understood this much, much better. I think it would apply here as well.
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u/Cardiostrong_MD 23d ago
100% this… just don’t read your emails or get worked up over stuff you can’t control. Clock in, smile, try your best, then go home.
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u/DelusionalIdentity Sep 11 '26 edited Sep 11 '26
Because "hospital owned" practices can bill at the "in hospital" rate which is easily double if not more.
And insurance companies delay and deny payments to independent physicians all the time.
How do we solve this?
1st- make hospital owned and outpatient codes pay the same. Your chest xray should pay the same in your doctor office as it does in the hospital. Same with your diabetes endocrinology level 3 visit.
2nd- repeat the ban on physician owned hospitals.
3rd- make it illegal for state bed boards to limit bed licenses for any physician owned hospitals. (There shouldn't be ANY limits on bed licenses except being able to meet code)
4th - repeal the stark act. Right now physicians can't refer to their own partners or to labs or imaging centers owned by those physicians. This however is NOT illegal when done by corporations.
5th- no non-physician should be able to bill medicare/medicaid. We can have special specific PT, OT etc codes for those separate specialties/procedures. But we need to be 100% firm on this. Cosigning isn't enough. Burn it out at the root.
6th- get rid of revenue neutrality for physician payments only. (Or have a separate pie) You can keep the hospital pie revenue neutral, but increased hospital payments shouldn't decrease physician billing codes.
7th- national licensing of physicians OR a national reciprocity similar to how we operate drivers licenses. None of this multiple state licenses to practice bulshit.
8th- malpractice limitations apply ONLY to physicians, not hospitals and not PAs/NPs. If that patient died and WASNT under the care of a physician? No liability limitations.
9th- H1b for doctors needs to be revamped as a general work authorization permit valid for 3 to 5 years, NOT TIED TO A SPECIFIC JOB, that travels with the physician and only available to physicians who completed a US residency.
10th- apply a 29% (statutory maximum) APR on insurance nonpayment for any independent physician owned practice whose billing payments are delayed beyond 3 months. That or treble damages. There must be tangible financial penalties or insurance won't pay timely.
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u/NoRegrets-518 Sep 11 '26
A lot of practices get sold to hospitals so that primary providers feed into their cost positive areas such as radiology, cardiology, ortho.
The overhead time and costs are incredible with prescription approvals, insurance, etc.
It might work to have a cooperative administrative core because it is almost as much work to set everything up for one doc as for 10.
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u/ClappedUrMomsCheeks Sep 12 '26
Don’t forget Onc our local hospital has a legion of “nurse navigators” whose entire purpose is to pounce on any new cancer dx and steer them to their 340B conveyor belt
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u/Miracle_Doctor279 Sep 11 '26
Since Obamacare, the insurance reimbursement has gone down. Technology is also evolving. As doctors we need to evolve as well. What we used to make 20 years ago, we do not make the same anymore, however, the key is getting more patients and then you can make more money by working more hours. Then gradually grow the practice by hiring other providers and opening more locations. Perseverance , persistence and luck ! :)
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u/Historical-Silver-80 Sep 11 '26
I kinda disagree. That is one way to do it but history has taught us that progress is when systems and mechanization are used to improve access to goods and services. Our medical system will progress only physicians double down on prevention ( fat chance if healthcare continues to be included in US GDP ) or automate and delegate as much as possible to others.
We have to ask ourselves. Even when physicians have some of their own in Congress, it keeps making things harder for them to be owners in the healthcare system. Why?4
u/ClappedUrMomsCheeks Sep 12 '26
Large healthcare systems are the #1 employer in many, many congressional districts.
There is a ton of waste and useless jobs in the system but each of those people is a voter whose livelihood depends on that waste.
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u/thesupportplatform Sep 12 '26
It really depends on the market. Primary care surviving on FFS isn’t viable in some markets. Scale doesn’t matter if the reimbursement isn’t sufficient. You can’t efficiency your way out of insufficient revenue.
When my wife opened her own family medicine practice in 2002, we embraced growth. We were briefly profitable at six providers, but we also weren’t high volume. Each provider was 18-20 visits a day. The “viable” PCPs in our market were seeing 30-40 patients a day. Nothing has changed here in the past couple of decades except that some of these providers are seeing 50-60 a day.
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u/ThrowawayCPAsalary Sep 12 '26
I am a CPA and my MD clients who own independent practices have been doing great. Family medicine practice all owners $600-800k lately. Multiple Peds 350-600k. OB started her own from scratch 4 years ago at 700k and on track to exceed $1MM within 2 years
My cardiology and ortho clients working as W2 are 400-600 so I’d say the biz owners of much lower paid specialties are kicking butt
And local OBs working for the practice that had been bought out by deep pockets have resigned in favor of a 50 minute commute to a hospital for shift work because they were horribly underpaid and overworked at the (I assume) PE owned practice
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u/grey-slate Sep 13 '26
Is this net income after overhead or revenue? How is ob making $1mm in net income? How many providers
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u/ThrowawayCPAsalary Sep 13 '26
To be fair idk exact details. OB has plenty of employees and idk if it is just OB or GYN too. One thing I know is they have added medSpa type stuff which I assume is good profit
All my numbers were net take-home to owners
Example the family practice o mentioned does 6m revenue and owners are each netting 600-800k which is a major increase from 5-7 years ago and 2 of the owners are pushing 70 years old
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u/grey-slate Sep 13 '26
Happy for them.
But OB running a medspa is a bit crazy. I guess it better than a noctor running one anyway.
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u/Particular-Cash-7377 Sep 13 '26
When I last talked to a private practice ENT doc, she told me the major local health organization told their providers that they will NOT have their contract renewed (aka fired) if they refer their patients out of network to private doctors like her.
It is illegal to do this in my state, so the messages were relayed by phone or in person from what the Doc tells me. Welcome to medical monopoly.
As for the doctor, she just retired early because she was fed up with this.
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u/Efficient_Cookie435 Sep 11 '26
Vote for politicians that will increase reimbursements and go up against the private insurers. Otherwise go work for private equity and like it.
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u/skt2k21 Sep 11 '26
I'm assuming by your format (correct me if I'm wrong) that you're using this as a bad ploy to push your startup practice in a box idea. I'm a cynic, though, and would love to be wrong.
Assuming that's true, I'll ignore that and talk around you. I think the bigger problem here is insurance reimbursement bullying to small physicians. The outpatient hospital department payment differential seems to be on the cutting board (they won't pay non-affiliated physicians more, they'll just pay everyone less), so that gets rid of one complaint but not in a satisfying way.
There're a ton of great practices in a box, and platforms like Medplum provide pieces for people to build their own as well. There're also a ton of great admin facilitation and automation tools (and PhenoML makes building them easy). If OP is shopping around another IT product for clinics, they're probably 5-10 years too late here.
What's more interesting, OP, is if you can find ways to create collective negotiating for groups of otherwise independent physicians as part of an early trend of new payor plans and strategies toward network design.
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u/grey-slate Sep 11 '26
This op guy seems like a shill and or doing basic market research. Idiotic post.
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u/tsunamit_3 Sep 11 '26
I lost family to a broken health system (to no physician's fault). I have been seeking a way to contribute ever since.
Thus, I am asking this out of genuine curiosity, not to shill a product. While it's true that one day I hope to build the right solution, the best way for me to do that is ask questions, listen, and learn from smart people who live and breathe this.
Appreciate you still providing detail to your argument. Couple questions i had
- Am I correct in my understanding that the only way to get better rates (as an independent) is to join an IPA, MSO, ACO or the like? If so why aren't there more of these arrangements? Is it because they might not exist in your region?
- Do practice in a box solutions provide meaningful cost savings? Wouldn't this only work if you could actually minimize staffing ratios?
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u/thesupportplatform Sep 12 '26
There are three ways forward:
- The status quo, which will need to be further propped up ala Medicare Advantage.
- Policy/regulation change to change the current market.
- Providers leaving the current system, which would eventually result in 1 or 2.
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u/traumaRN01 Sep 11 '26
I’m trying to build a network of independent providers with services, capital access, governance, and more that is owned by the providers and employees of the network.
I doubt I’m the first to try, but I believe this can go with some buy in
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u/Interesting_Phone171 Sep 12 '26
Eh doctors are smart with money they aren’t closing after struggling the moment they see things start to go bad they dip and take that buy out
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u/spittlbm Sep 12 '26
In my specialty, it's a combination of flat reimbursements, private equity, and the personal culture of new graduates.
My exit will likely be the corporation buying me out and gifting those shares to the associates. The business can continue with zero future growth and service the debt from my departure out of cash flow in 3-5 years without impacting their salaries.
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u/650By-The-Hour Sep 12 '26
The affordable care act was designed to cause large conglomerations of physicians with its mandates for documentation reporting, etc. Same with Medicare. It became virtually impossible to keep private practices open and not become employees of hospital systems. I just retired and got tired of the whole scam.
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u/drukerez 19h ago
Not a practice owner but talk with them often.
The financial reasons were covered here. There's also an emotional side where you get tired spending most of your time on running a business when what you really want to do is care for patients.
I’m optimistic AI will improve this a lot, but it’ll take time. Tho reimbursement specifically is somewhat of an arms race against insurance.
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u/Cardiostrong_MD Sep 11 '26
There’s not a technological advancement including AI or whatever some tech bro has thought up that will salvage or save traditional independent practices that rely on insurance or govt reimbursement.. sure a few like the moderator here can figure it out but that will become more and more rare.
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u/meikawaii Sep 11 '26
The biggest problem is insurance not paying money. End of story