The healthcare landscape in the United States has been undergoing significant changes in recent years. One notable trend is the increasing consolidation of healthcare services through hospital and corporate entities' acquisition of physician practices. This blog explores the consequences of such consolidations on Medicare payments and patient care. We will delve into the implications of hospitals acquiring community physician practices and how it has led to inflated charges and subsidies. Additionally, we will discuss the proposed site-neutral payment system and its potential to remedy the situation.

The Rising Trend of Physician Practice Acquisitions:

During the COVID-19 pandemic, the healthcare industry witnessed a substantial surge in hospitals and corporate entities acquiring physician practices. According to data from Avalere (1), between 2019 and 2021, 36,200 additional physician practices were acquired nationally, resulting in a 38 percent increase in corporate-owned practices. Over 108,000 physicians transitioned from independent practices to becoming employees of hospitals and corporate entities during this period.

Impact on Medicare Payments:

The current Medicare payment system has been criticized for its payment disparities based on the location of service delivery. Hospitals, after acquiring physician practices, charge higher rates for the same services that were previously offered by independent doctors. This results in Medicare paying more for procedures performed in hospital-affiliated facilities than in independent offices or patients' homes, leading to higher costs for both patients and taxpayers.

Dishonest Billing Tactics:

To capitalize on higher reimbursement rates, some hospitals resort to dishonest billing tactics. They redefine the location of the doctor's office from an off-site facility to within the hospital setting, allowing them to charge higher rates for services. This practice misleads patients and taxpayers and contributes to inflated charges.

The Solution: Site-Neutral Payment System:

The proposed solution to address these issues is a site-neutral payment system for Medicare. The system would pay hospitals and independent doctors the same rate for performing the same procedures. This would eliminate the incentives for hospitals to buy physician practices and engage in dishonest billing practices, promoting transparency and fair reimbursement.

Potential Benefits of Site-Neutral Payments:

Adopting a site-neutral payment system could lead to various benefits, including reducing the national debt, lowering Medicare shortfalls, and strengthening the financial health of the program. According to estimates by the Congressional Budget Office (CBO), taxpayers could save over $141 billion in rate cuts alone over ten years, and Medicare beneficiaries could save on reduced premiums and cost-sharing.

Bipartisan Support and Advocacy:

The site-neutral payment proposal has gained broad bipartisan support. Advocates, including healthcare policy experts and grassroots advocates like Dr. Marion Mass, emphasize the need for cost transparency, reduced administrative burden, and regulatory relief. The site-neutral payment system is viewed as a commonsense reform that can enhance competition, lower prices, save taxpayers' money, and improve access to affordable healthcare for patients.


The consolidation of physician practices by hospitals and corporate entities has led to significant disparities in Medicare payments. The implementation of a site-neutral payment system could be a crucial step in addressing this issue and ensuring fair and transparent reimbursement for medical services. By supporting this reform, policymakers can work toward reducing healthcare costs, improving patient access, and fostering a more sustainable healthcare system for the future. It is essential for all stakeholders to prioritize the interests of patients and taxpayers over special interests to promote a healthier and more equitable healthcare system.


  1. Physician Practice Acquisitions By Hospital, Corporations Grew:
  2. Updated Physician Practice Acquisition Study: National and Regional Changes in Physician Employment 2012-2018:
  3. Fix Medicare Payments:
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