Why banning corporate medicine won't save independent practice, with Wayne Winegarden, Ph.D., of the Pacific Research Institute

A practice weighing an offer from a health system or a management services organization is running that math against 25 years of Medicare payment that never kept up. Medicare physician payments rose 12% between 2000 and 2022 while the cost of running a practice climbed nearly 48%, and Wayne Winegarden, Ph.D., says that gap, not corporate ownership, is what decides most of these deals.

Medical Economics Associate Editor Austin Littrell sat down with Winegarden, a senior fellow in business and economics at the Pacific Research Institute and director of the institute’s Center for Medical Economics and Innovation.

Winegarden lands on control over decision-making as the line that separates an MSO partnership preserving independence from an acquisition with the paperwork rearranged: who sets coding policy, who controls the medical records and who makes the hiring calls. He covers what the early evidence shows about collections and prices after an MSO deal, why he considers California’s Senate Bill 351 a better model for practices than Oregon’s Senate Bill 951, and what a practice should be asking before it signs anything. He also notes that state corporate practice bans typically exempt hospitals, which leaves independent practices carrying restrictions their acquirers do not.

Winegarden made the same case in a February issue brief, “How Government Policy Is Consolidating the Practice of Medicine.” At the federal level, he wants Medicare physician pay permanently indexed to inflation and site-neutral payment for common outpatient services.

Don’t miss our recent episodes on disclosing medical errors, physician corporatization, malpractice rates and physician-owned hospitals.

Music Credits:

Distant Memories by Buurd - stock.adobe.com
A Textbook Example by Skip Peck - stock.adobe.com

Editor’s note: Episode timestamps and transcript produced using artificial intelligence (AI) tools.

0:00 – 0:32 | Cold open Winegarden on inflation as a tax on independent practice.

0:32 – 1:51 | Introduction Austin Littrell introduces the episode and the guest.

1:51 – 3:07 | Another year of the payment gap CMS has proposed a 2027 physician pay cut alongside a raise for hospital outpatient departments. Winegarden on the accumulation of frustration and the psychological question of whether it ever gets better.

3:07 – 4:52 | The counterfactual If Medicare payment had tracked inflation since 2001, how much consolidation never happens. Winegarden says the exact number is not knowable, and that the problem is government policy putting a finger on the scale rather than consolidation itself.

4:52 – 7:30 | Site-neutral payment and the inflation tax Why site-neutral passes on cost savings alone, why indexing physician pay to inflation is the harder sell and what keeping practices open would actually net out to.

7:30 – 9:58 | What counts as an independent practice The traditional definition is a doctor-owned or controlled practice. Winegarden calls MSOs a hybrid and argues that the experimentation is the point.

9:58 – 12:32 | Partnership or acquisition Control over decision-making is the dividing line. Winegarden on the bean counter in Pennsylvania writing rules for a patient in Oregon, and what an MSO has to deliver to be worth the affiliation.

12:32 – 13:24 | P2 Management Minute Keith Reynolds shares practice management tips and invites listeners to submit their own workflow ideas.

13:24 – 15:05 | What happens to prices after an MSO deal Better collections and firmer practice finances, prices still below hospital rates, and why not enough time has passed to know where the competition leads.

15:05 – 16:53 | Oregon’s law gets its first test An independent group used the law to fight off an out-of-state staffing firm. Winegarden says the case does not complicate his argument, and that Oregon’s overly strict law is the reason the conflict looks the way it does.

16:53 – 18:07 | Why not extend the rules to hospitals Binding hospitals with the same restrictions reduces competition. Winegarden wants more ideas in the market, not fewer.

18:07 – 20:06 | What a practice should ask before signing Quality of life, compensation, how physicians spend their time and the risk they bear. Winegarden says there is still no evidence that fully independent practice is an inefficient way to deliver care.

20:06 – 22:19 | Does independent practice survive the decade Winegarden says yes, and that if it does not, Medicare reimbursement and regulatory burden will be the cause rather than a better model winning.

22:19 – End | Closing thoughts and outro Littrell thanks Winegarden and wraps the episode.