Declining Reimbursements & Getting Paid

Independent physicians are the backbone of our healthcare system, yet many are feeling the squeeze. Over the past decade, reimbursement rates from insurers including Medicare and Medicaid have steadily declined, while the cost of running a practice has only gone up. Rent, staffing, technology, compliance, and malpractice premiums continue to rise, but the payments practices receive per patient encounter often fall short of covering those costs.

Meanwhile, hospital-affiliated practices are able to negotiate higher reimbursement rates, leaving independent groups at a structural disadvantage. For small and midsize practices, this imbalance doesn’t just strain finances, it can threaten long-term sustainability.

So, how do independent practices not only survive but thrive in this environment?

1. Know Your Numbers

Reimbursements are complicated, but your ability to negotiate and plan hinges on accurate data. Track your payers’ reimbursement rates by service line, denial rates, and the percentage of your revenue tied to each insurer. With this information, you can identify where underpayments are happening and where renegotiation may have the most impact.

2. Leverage Your Value

Larger systems often secure higher rates because they can show measurable outcomes and efficiencies. Independent practices can do the same by highlighting quality metrics, patient satisfaction scores, continuity of care, and community impact. Payers are more willing to negotiate when you can demonstrate cost savings and improved outcomes for patients.

3. Diversify Your Payer Mix

Over reliance on a single payer leaves your practice vulnerable to reimbursement cuts. Expanding your payer mix whether through additional commercial plans, Medicare Advantage, or even direct-pay services can stabilize revenue streams and reduce risk.

4. Tighten Revenue Cycle Management

Even small inefficiencies can mean big losses. Ensure that your credentialing, billing, and collections processes are optimized. Automating administrative tasks like prior authorizations, claims tracking, and eligibility checks can reduce denials and accelerate cash flow.

5. Consider Strategic Partnerships

Staying independent does not mean going it alone. Joining forces with other independent practices, clinically integrated networks, or specialized support partners can increase your bargaining power and reduce administrative burden. These partnerships preserve autonomy while improving your ability to negotiate favorable contracts.

The Bottom Line

Declining reimbursements are one of the biggest challenges facing independent physicians today. But with the right data, strong payer relationships, and streamlined operations, practices can protect their financial health and continue delivering the personalized, high-quality care patients value most.