Healthcare affordability has emerged as a critical issue, with nearly half of Americans indicating they struggle to afford quality care. This sentiment has grown since the expiration of Affordable Care Act premium credits in 2025 and upcoming cuts to Medicaid this year. As concerns over healthcare costs escalate, financial anxiety has become a part of everyday life for many.
Jerry Penso, M.D., leads an organization representing over 440 medical groups nationwide. Throughout his career, he has witnessed firsthand the intricate dynamics of the healthcare system. Many stakeholders within this sphere often identify various factors contributing to rising costs. However, highlighting these issues alone has not resulted in reduced premiums. Instead, Penso emphasizes the importance of showcasing initiatives that are effectively working to reduce costs and pinpointing the barriers that hinder progress.
The case for innovative care redesign is evident when comparing past and present surgical practices. For instance, same-day outpatient joint replacement surgeries have drastically transformed patient experiences and costs. Where his father required a five-day hospital stay post-surgery decades ago, Penso’s brother was able to leave the hospital on the same day of his procedure. This shift is not coincidental. It represents a major move towards outpatient care, driven by deliberate redesign and investment in healthcare practices, without needing a formal policy mandate.
Moreover, the introduction of advanced practice providers (APPs), including nurse practitioners and physician assistants, plays a significant role in improving care accessibility and affordability. APPs now represent approximately 48% of the provider workforce among AMGA’s member groups, a number that has expanded considerably over the last ten years. This evolution reflects a conscious effort to restructure care teams in ways that enhance access while reducing costs without compromising quality.
Despite these promising advancements, significant challenges remain with the foundational payment systems governing the U.S. healthcare landscape. Medicare and Medicaid cover nearly half of all patient visits; however, the conversion factor of the Medicare physician fee schedule has diminished in real terms since 2010 while the costs associated with running a medical practice have surged by about 20% within the same timeframe. The One Big Beautiful Bill Act (H.R. 1), enacted last year, has introduced substantial cuts to the Medicaid program, leading to projected savings of over $900 billion between 2025 and 2034, as estimated by the Congressional Budget Office.
A recent survey by AMGA revealed the following regarding the anticipated impacts of these Medicaid cuts: 38% of medical groups are currently cutting patient services, 68% plan to implement future cuts, and 21% may face facility closures or restructuring. Additionally, 64% anticipate potential lay-offs, notably impacting frontline clinicians who provide essential care.
As healthcare payment structures struggle to cover the costs adequately, many investments vital for long-term cost reduction may simply vanish.
The administrative demands within the healthcare system compound underlying financial strains. For instance, the management of prior authorization processes is resource-intensive and costly. An estimated 53 million prior authorizations occur annually in Medicare Advantage alone, using approximately 12 to 15 cents of every premium dollar—money that could otherwise be utilized for direct patient care. One executive's account of resolving a single imaging denial, which involved extensive coordination among multiple administrators and physicians, underscores the inefficiencies embedded in the system.
For substantial progress toward more affordable care, policymakers and industry leaders need to consider effective solutions. Simply implementing new mandates is unlikely to yield desired results. Instead, Cory reforms such as stabilizing Medicare payments to reflect actual healthcare costs and reducing cumbersome administrative requirements like prior authorization could offer practical avenues for improvement.
Medical groups are actively working to make care more affordable today. They are innovating how services are delivered, expanding the capabilities of care teams, and transitioning procedures to lower-cost environments. The pressing question now is whether the broader healthcare system, including the policies that underpin it, will evolve to support these positive changes rather than hinder them.
Dr. Jerry Penso continues to advocate for solutions that enable medical groups to fulfill their commitment to quality and affordable care, fostering a healthcare landscape that better serves all Americans.
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