PHYSICIAN PAY CUT THREATENS PRACTICE STABILITY

Glenwood Systems, LLC is a medical practice management company in Waterbury, Connecticut. Since 1998, they have been in the business of providing physician practices with  expertise in medical billing and managing the business side of health care. On December 9th, they issued a commentary on “The Impact of the 2025 Medicare PhysicianPayment Cut.” They are telling doctors information, now, that impacted my practice 17 years ago, and doctors in general for 30-40 years—ever since Medicare initiated the Resource-Based Relative Value payment system employing a Medicare physician payment Conversion Factor. 

I have written numerous blog posts about this subject because it is so important and so onerous that it will result in the closing of hundreds of physician practices, the premature retirement of thousands of physicians, and usher in the conversion to a government-controlled  health care system. Now, a practice management company is warning physicians that the reduction in the Medicare conversion factor threatens to “intensify the already significant challenges faced by the medical community, including rising inflation, soaring operational expenses, and pervasive burnout among healthcare professionals.”

This dire situation affected my practice from 2004-2007, so this is not a new dilemma. Payment declined so much that increasing daily patient volume could not make up the deficit. Payments annually declined while every other expense increased. My solution was to become an employee of a large group practice. I was their employee until the end of 2013 (7 years), at which time I retired.

In the ten years since I retired, the Medicare Physician Conversion Factor has continued to decline annually. This year’s reduction is 2.83% or a drop from $33.2875 per RVU to $32.3465 (a drop of $0.941 or RVU). That comes at a time when a projected 3.5% increase in practice costs is expected. So the two together spell financial strain and possible collapse, for practices populated largely by Medicare beneficiaries and that rely heavily on Medicare payments for revenue. 

Glenwood Systems anticipates trouble and offers several warnings and consequences of the financial burden Medicare has created for physician practices. 

1. Workforce shortages are inevitable worsening physician burnout. 
2. Nearly 70% of practices will plan to delay hiring new staff of additional physicians.
3. Sixty-seven percent of practices will eliminate certain “unprofitable” services.
4. Practices will “delay population health initiatives, upgrades in care delivery, and social programs.”
5. Practices will need to “redesign physician compensation”—decrease payment means less income.
6. Will need to re-negotiate insurance contracts to offset Medicare reductions.

Glenwood Systems sees a light at the end of the tunnel: the House Medicare Patient Access and Practice Stabilization Act of 2024. It aims to ease the financial strain caused by Medicare pay cuts by eliminating the 2.83% payment cut and proposing a 1.8% payment increase. Yeah, right! This is “smoke and mirrors!” This is “deja vu all over, again!” Congress has pulled this stunt many times before. It’s an attempt to assuage seemingly unsuspecting physicians into accepting a paltry pay increase that barely touches the effects of the horrible inflation of the past four years. This is fake news and subterfuge at its finest! We can send billions to foreign governments at the drop of a hat, but sustaining our own healthcare system is too burdensome.

I think the author of this piece from Glenwood Systems must be new or too young to realize this has all happened before. It ain’t gonna happen, and if it does, it won’t be the proposed 1.8%; it will be lower. 

There is indeed a healthcare crisis in this country, but it’s not limited access or quality of care. It’s a failure to prioritize government revenues for programs that actually keep intact, or expand, the healthcare workforce. These programs preserve the ability of patients to receive care from the best trained, most intelligent, most insightful, and most competent physicians; Physicians who love practicing medicine and are compensated commensurate with their talent.   Any decline in quality, or availability, of care can be traced back to the destructive impact of the Medicare physician payment system and the havoc it has caused for physicians. Its influence affects all payers, providers, hospitals, and clinics; not just Medicare.

I don’t see anything changing because we all know physicians……(insert your own aspersion).

Reference: Ayre Monica. The Impact of the 2025 Medicare Physician Payment Cut. Email from mo****@*************ms.com 2025 December 9.