Why Private Practices are Abandoning Insurance – and It’s Not Slowing Down

Winona Cruzan

Winona Cruzan

Posted on August 26, 2015

health insuranceMany private practices are starting to feel the pinch brought on by the Affordable Care Act. Rising costs and red tape, coupled with declining payments and revenue, are causing many practitioners to switch to employment in hospitals with the potential of greater earnings.  But those who prefer to stay in private practice are increasingly opting out of insurance altogether.
Most practices are citing a number of ACA health plan repercussions that are contributing to financial burden:

  • Increased administration, consisting of mountains of digital paperwork plus additional compliance reporting that’s now required by the government  
  • Reduced payments and reimbursements.  This makes it increasingly difficult for private practices to remain profitable.

One way doctors who accept ACA plans can protect their bottom line is to increase the number of patients they see per day – but this often compromises the integrity of the relationship because physicians are not able to spend as much time with each patient.  Many are also finding themselves needing to increase the number of reimbursable tests and procedures that they perform.

Why some choose to step out of the insurance game

Other practices are simply abandoning insurance altogether – a growing trend that doesn’t look set to slow down anytime soon. The short and long-term effects of this new business model, both for doctors and patients, are wide-reaching.  
For patients, this means paying physicians directly. Some health advocates are concerned about the effect this may have on patients who rely on an insurance plan, who may now be forced to find a new doctor. Practices that have adopted this model have initially reported large drops in patient numbers, yet they have also reported the ability to spend more time with each patient and provide higher-quality health care.
With the administration tasks brought on by the insurance system removed from the equation, direct-pay practices can significantly reduce overhead costs.  So seeing fewer patients can actually return greater profits in the long run.

The next level: membership-based private care

Some doctors are going one step further and creating their own business models – such as a membership based concierge medical practice, where patients pay a flat fee (typically per month) for 24/7, “VIP” access to primary care services. Practices that have adopted this model typically report an increase in revenue, more time with patients, and complete control over their business with no burden of answering to insurance companies.

Going insurance-free can benefit patients, too

Patients who choose a doctor who uses a pay-as-you-go system may also benefit financially, even if mandated to purchase additional ACA insurance. By selecting a high-deductible policy with minimal premiums for emergencies, patients can use the money they save up front to pay for services as they go. Most concierge services also negotiate discounted rates for services like x-rays or vaccines, so out-of-pocket expenses can be significantly reduced.
The Affordable Care Act’s effect on the US healthcare system has had a strong pull on doctors as much as it has on patients. And given all the changes, it may be time for small practices to examine their businesses in order to compete in this new market.


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