The loss of independent physicians in rural America

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The numbers of independent physicians and medical practices declined by the thousands in recent years across the nation’s rural landscape. It is an exodus that should alarm doctors, patients and policymakers interested in sustaining health care for millions of patients who do not live around large cities, according to the Physicians Advocacy Institute (PAI).

This spring, PAI published figures that show a five-year decrease in numbers of independent physicians, starting at the rate of 20% and, in 10 states, dropping by up to 50%. At the same time, the overall number of doctors is declining, as is the rate of independently owned physician practices, according to the figures. The study methodology and full results are available at physiciansadvocacyinstitute.org.

PAI CEO Kelly Kenney, J.D., spoke with Medical Economics about the findings. The following transcript was edited for length, style and clarity.

Kelly Kenney, J.D., CEO of the Physicians Advocacy Institute (PAI).

Medical Economics: Can you describe that study and some of the results?

Kelly Kenney, J.D.: The study that we released was conducted by Avalere Health; they’ve worked with us on our prior studies that look at consolidation trends for physicians, and we really wanted to get a better understanding of how these trends have affected rural America. So, we asked them if they could do their slicing and dicing of the data to provide an insight into rural areas and not only … ownership and employment changes, but actually, are there physicians and practices that are exiting? Because we know there’s a lot of concern about rural hospital closures and just rural America losing its clinical base. And what does that do for patients … who already live in areas that can be very remote? That was our thought when we went into this, and we knew just based on numbers for the larger trends that in rural America, we were going to see changes in ownership.

We were surprised and concerned, however, that rural areas in this country have lost 2,500 physicians over the five-year study period that we looked at. This study looked at the beginning of 2019 to the very beginning of 2024, so that’s a five-year period. And in that time, 2,500 physicians exited rural areas and 3,300 medical practices closed. So, there are 3,300 fewer location practices in rural America than there were back at the start of 2019.

Those trends just show us that there’s change, that practices are closing. It suggests that it’s likely that we’ve had lots of retirements and that the practitioners are not filling back in, if you will, into those areas, which obviously raises concerns for those patients living in those areas.

Medical Economics: From January 2019 to January 2024 is a period of history we’re probably going to remember for the COVID-19 pandemic. With the decline in independent physicians, especially in rural areas, was that simply an unfortunate effect of the pandemic?

Kelly Kenney, J.D.: We saw really across the country that before the pandemic, many physician practices … were kind of hanging on to independence by the start of 2020, because those trends were occurring before that, right? We know anecdotally, just from working with physicians every day, that many practices were really trying to hold on to owning their own practices. They wanted to work in physician-owned environments and have physicians driving clinical decision-making and policies. But we saw a very sharp uptick in practice acquisitions by hospitals and other corporate entities in the last half of 2020.

Talking with physicians in all our states, we heard, like, I just couldn’t keep it together, I couldn’t keep it open, we were losing money, and then we had to close for COVID-19. The PPP [Paycheck Protection Program] money was helpful, but didn’t do it fully. And then I got an offer to sell to hospital X or private equity firm Y, and I just had to take it. We know that was kind of the last straw. There was a definite uptick, but these trends really transcend COVID-19. They predated COVID-19, and now they’ve continued past COVID-19.

We are at the point now where you have almost 80% of doctors employed, and so there’s going to be, at some point, a leveling of these trends. We keep waiting for that to occur, but with the entrance of new corporate owner type, corporate acquirers, if you will, those trends really just continue.

Medical Economics: Regarding PAI, what changes at the federal or state levels would you like to see to increase the numbers of physicians in rural areas?

Kelly Kenney, J.D.: One thing we know is that independent physicians have been the backbone of care in rural areas. These small physician practices — we call them the onesies and the twosies — have been a critically important part of the infrastructure of care for patients in rural America. To allow them to sustain independent practices, or, for instance, if an employed physician wants to set up a practice in those areas, we need to make sure that payment, particularly when it comes to Medicare payment … reflects the cost of providing care. And Medicare payment for physicians has not done that, and so that’s critically important that that occur, and we’ve been advocating for that.

In fact, we plan to use this study in our advocacy to show that the consolidation trends that have been frankly allowed to occur fairly free from any regulatory oversight, that, in part, those have been driven by payment policies that somewhat undervalue physician care when delivered in independent practice settings.

For instance, for most of its history, Medicare has paid more for the same services delivered in a hospital setting or a hospital-owned setting than that same service in a physician office. So those policies, of course, incentivize hospitals to expand the services that they provide, because they’re making more money on those services. We want to make sure we at least provide the information that policymakers need to make better decisions on that and keep payment up with the cost of inflation.

We’re also very concerned about wholesale cuts to Medicaid. Medicaid is the insurer of the nation’s poorest individuals and pregnant women, and we want to make sure that we don’t impose cuts that would undermine those patients having access to good primary care, to specialists, and not have to go to the emergency room to get their primary care. We know that’s a failed model. It’s an expensive model, and it’s a failed model. So, I would say Medicare payment, Medicaid coverage, and looking at consolidation and the impact of consolidation, because consolidation equals less competition equals higher prices for everybody. Those are really important themes for PAI advocacy.

Medical Economics: What did I not ask about that you would like our physician audience to know?

Kelly Kenney, J.D.: One thing that I always think about is there’s access with a big A and access with a little A. There’s access, meaning physical access to your clinician in a setting that is reasonably close to your home, so that you can get there on a regular basis to go in and get the care you need. And that could be a physician practice or a rural hospital, but those patients in rural areas deserve to have clinicians close by to treat them. Then there are the broader access questions. Once you have access to your doctor and you’re seeing your doctor, what kind of impediments are there for you to get the care you need? And we know there are ensure policies like prior authorization and policies that essentially make doctors and patients jump through a lot of hoops to get care, and in some cases, actually require physicians to try a lower-cost, lower-level … pharmaceutical and fail, meaning the patient doesn’t respond well to it before they’ll approve a higher-cost service.

And certainly, we don’t want to promote unnecessary care or low-value care, but we don’t want to impose policies that are designed to stall or delay or frustrate physicians and patients to the point where they just throw their hands up and give up. So there’s a lot of those … small A access questions, when it comes to this new world of physicians being employed by corporate entities. The corporatization of care is something we talk about every day, and it is concerning, and we might need new policies to protect patients from undue corporate interference in their health care.

Medical Economics: It sounds like we need to discuss not just access to health care, but also levels of access to health care.

Kelly Kenney, J.D.: And one other nuance, but it’s a growing concern, is when you have an insurer employing a physician. Meaning say, Optum, they’re owned by UnitedHealthcare. Optum is the largest single employer of physicians in the country. Now they’re affiliated with the insurer that has all the traditional insurance levers to impose policies like prior authorization to theoretically make sure care is appropriate, but all too often, just results in delayed [or] denied care, sometimes with life-threatening results. Now they also employ the actual physician and other clinicians, and they get to employ policies on them as employers that kind of doubly concern impact.

So it’s very concerning, it’s complex, it’s fairly … new. So, we need to really pay close attention. And PAI certainly has done that. But we need to pay very close attention to these policies and how these new ownership trends and these corporate owners, particularly, are seeking to maximize profits in this environment. Because it’s not too hard to see patient care being the thing that suffers.