Private Practice Dwindles – Should Patients Care?

by Daniel McCauliffe, M.D.

During the past three years approximately twenty Rutland physicians have given up their private practices and moved to employed positions in hospitals or Federally Qualified Health Clinics (FQHCs). This is not just a local phenomenon, as it has been happening throughout Vermont, and the country.

This trend has been caused by actions of our federal government that serve to marginalize private practice medicine, by paying private practice physicians less than what they would earn as employees of hospitals or FQHCs. For example, in 2009, Medicare cut private practice payments for certain heart studies by 40%, while increasing reimbursement to hospitals by 5 percent. So the payment for the same service in a hospital setting is now 45% higher than if done in a private office. This is a major reason why virtually all of the cardiologists in Vermont are now hospital employees. Our local obstetrician-gynecologists and general surgeons have become employees of the hospital due to similar financial incentives.

Primary care physicians are joining the FQHCs due to financial incentives as well. For example, Vermont Medicaid pays private practice physicians at about 79% of the low Medicare rates, while paying FQHC employed physicians 125% of the Medicare rates. This means that FQHCs receive payments that are approximately 58% higher than what private practice clinics receive. In addition, FQHCs are “nonprofits” so they have tax saving advantages over private practice and some physicians employed by the FQHCs have special malpractice protections. So there is little wonder as to why physicians are abandoning private practice. Hospitals are not to blame for this change. It is a result of federal government health care policies and payment schemes.

In this time of ever escalating health care costs, one should wonder why the government is encouraging the death of private practice, where in fact health care is being delivered in a less costly fashion. The reason is that these higher payments to hospitals and FQHCs serve as the carrots to get physicians in employed positions where they will be more easily controlled by governmental administrators. Dr. Donald Berwick, the head of the federal Medicare and Medicaid system stated: “The primary function of regulation in health care…is to constrain decentralized, individualized decision making…. The traditional medical ethics, based on the doctor-patient dyad, must be reformulated to fit the new mold of delivery of health care.” He is saying that we must end the traditional doctor-patient relationship and turn the power of decision making over to bureaucrats for “top-down” control, so that they can better do what is best for the system and the population at large, rather than wasting resources by focusing on the needs of individual patients.

By strengthening the government’s control of health care, doctors will be more easily forced to follow the orders of their bureaucratic masters who control the purse-strings, even if it goes against doing what is best for their patients. Vermont’s single payer Green Mountain Care system and the national PPACA health care law, also known as “Obamacare”, will facilitate this new vision of tighter government control over our health care system.

There are examples of how patients’ needs are placed second to the government’s needs, when physicians become beholden to the government health care administrators. For example, in 2008, there was a scandal in Great Britain when the public became aware that the government-run healthcare system paid bonuses to family physicians who limited the number of patients they referred to specialists and for hospital care. There were examples where patients’ cancers went undiagnosed while they were denied specialist care under this bonus scheme.

There is no question that change is needed to make our health care system more affordable. However, we should seek reform measures that preserve the partnership and trust in the doctor-patient relationship. Medical decision-making is best left to the patient and the doctor, and in some cases the patient’s family, but not government administrators. Unfortunately our current health care reform laws will be giving government bureaucrats great power over the decision making process. This power will interfere with physicians’ ability to do what is best for each and every patient, and weaken the trust in the doctor-patient relationship.

5 thoughts on “Private Practice Dwindles – Should Patients Care?

  1. Since this opinion piece was posted, less than 2 months ago, an additional 5 Rutland primary care physicians have left private practice to become employees of a FQHC. Most of the few remaining primary care physicians in private practice are approaching retirement age, and two have recently converted to a concierge practice.

  2. It is very disappointing to learn that Medicare pays private Dr less than hospital employed Drs.

    I would like to know the names of the Congress men who added this clause to what ever lay mandates this.
    Does anyone know?

  3. There is no question that this is just part of the obama administrations desire to totally socialize US healthcare. Step one… for the Dr out of private practice into corp medicine.

    Step 2.. bankrupt that corp medicine with dramatic rate cuts (see what happens to medicare and medicaid when the “committee” cant agree on budget cuts”

    Step 3 – Set up Accontable care organizations that will be te platform for a national health system controlled by the goverment. You will note the govermnet will “pay” the hospital directs under an ACO rather than use an insurance company… this is by design to create another control for the federal govt.

  4. Thanks for clarifying this for us.
    Sounds like Obamacare will do for health care what gov’t did for schools–raise costs while lowering scores and accountability, plus a “my way or no way” mentality.

  5. “By strengthening the government’s control of health care, doctors will be more easily forced to follow the orders of their bureaucratic masters who control the purse-strings, even if it goes against doing what is best for their patients. Vermont’s single payer Green Mountain Care system and the national PPACA health care law, also known as “Obamacare”, will facilitate this new vision of tighter government control over our health care system.”

    At, according to the doctor who penned this piece, a higher cost. Makes little sense to me other than fostering the BIG government that so many people seem to want, at little or no cost to themselves. Humbug!

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