The Decade in American Medicine

Introduction (00:02):
Welcome to Health Law Talk presented by Chehardy Sherman Williams. Health law broken down through expert discussion, real client issues, and real life experiences. Breaking barriers to understanding complex healthcare issues is our job.

Conrad Meyer (00:24):
Good morning, good afternoon, whatever time it is you’re listening. Welcome to another episode of Health Law Talk here, Conrad Meyer, Rory Bellina. Rory.

Rory Bellina (00:33):
Welcome back. Thanks for listening.

Conrad Meyer (00:35):
Absolutely. Interesting. Rory, today 77.6% physician employment rate, 300,000 AI denied claims in two months. The largest hospital bankruptcy in history. If you told me 10 years ago that more than three quarters of American physicians would be employed by hospitals or some corporate entity or that insurance companies would be using AI, right? Jarvis, like to deny claims. 300,000 claims in a two month span and private equity firms are going to drive the largest hospital bankruptcy in the United States history. I would’ve said you’re crazy.

Rory Bellina (01:13):
Yeah.

Conrad Meyer (01:13):
Crazy.

Rory Bellina (01:14):
It’s taken a while to get here. I think none of this has happened overnight. I think we could all recognize that, but there’s been big and big shifts over time, probably about 10 years or so, I would say a lot of these have been implemented.That’s how we get to where we are now.

Conrad Meyer (01:32):
So today we’re doing something a litle bit different than we normally do. We’re going to go look at 10 years, a full decade of American healthcare and see what has changed. We’re going to talk about basically five, and I know there’s more than five. I don’t have enough time to do more than this, but so five forces that have fundamentally reshaped how medicine is practiced in this country, which include declining reimbursement, the explosion of administrative burden by physicians. We’re going to go

Introduction (02:02):
Into

Conrad Meyer (02:02):
That. AI insurance denials, the shift from the former independent practice to employment model, and of course corporate and private equity takeover.

Rory Bellina (02:12):
Takeover. Well, let’s start. Let’s jump right in. I think we should start with reimbursement. I think that’s probably the biggest one that is probably the most important to talk about.

Conrad Meyer (02:21):
Absolutely. So it all begins with the paycheck. I agree with that. And like most people, physicians want to get paid. So in 2015, Congress passed the Medicare Access and CHIP Reauthorization Act and MACRA. We knew of as MACRA. And it was again, bipartisan, celebrated, talked about permanently repealing a dreaded growth rate formula for Medicare and threatened basically at 21, what, what 0.20% payment cut at the time. So Macro was the end all, be all of how we stopped the train.

Rory Bellina (02:56):
Yeah. And it did give somewhat of an annual increase going back from, I guess 2015 to 2019, but then it kind of stabilized, especially during COVID from early COVID, from 2020 through 2025, that update was at 0%, zero. No adjustment, no adjustment for inflation, no cost of living increase, nothing. So that was a problem.

Conrad Meyer (03:19):
It was. And look, the number that tells the story, the Medicare conversion factor,

Rory Bellina (03:23):
The dollar

Conrad Meyer (03:23):
Amount that converts the RVU relative value units into actual payments. It’s

Rory Bellina (03:27):
Gone down.

Conrad Meyer (03:28):
Correct. Correct. Gone down. That’s

Rory Bellina (03:32):
Basically

Conrad Meyer (03:33):
What, a 9.6% nominal decrease.

Rory Bellina (03:36):
Yeah. My notes show that it was at 35, 80 in 2015 and now it’s down to roughly 32, 35. So yeah, about nine, 10% decrease. Yeah. But that doesn’t- But it’s

Conrad Meyer (03:48):
Not like the cost went down.

Rory Bellina (03:50):
No, because then when you adjust for inflation, that’s almost now probably 33%. I would say going back 20, 25 years.

Conrad Meyer (03:58):
Now here’s the Kecker, this is what gets me and this is really interesting. Hospitals. Hospitals get automatic annual inflation adjustment, Medicare, nursing homes get it.

Rory Bellina (04:11):
Yep.

Conrad Meyer (04:11):
But what about physicians?

Rory Bellina (04:13):
No.

Conrad Meyer (04:13):
No?

Rory Bellina (04:13):
No, nothing tied to inflation. No. I mean, I know hospitals have gone up. Our notes were showing over 70% over the past 20 years. Physician reimbursement though, 26% decrease.

Conrad Meyer (04:28):
So

Rory Bellina (04:28):
Look

Conrad Meyer (04:28):
Where it’s pushing physicians. That’s again, another

Rory Bellina (04:30):
Employment. I mean, this kind of gets into another topic, but yeah, out of the private practice world and into hospital employment because that’s where the money is.

Conrad Meyer (04:38):
Right. Right. And look, we need to talk about Louisiana specifically. So Louisiana Medicaid historically paid physicians about 73% of Medicare rates, which is

Rory Bellina (04:50):
Already low, right? So Medicare is low and now Medicaid is paying 73% of Medicare. And so we’re now three tiers down on where probably the rate should be.

Conrad Meyer (05:02):
Well, interestingly, in July of last year, the state increased it to 85%. So with plans to trying to reach 100% by 2027, 2020, they had to. Are you going to have too many physicians opt out of Medicaid? So again, it goes back to a long time ago about do you really have access with coverage? So I mean, I’m just saying so that-

Rory Bellina (05:24):
Yeah. Do you have access or do you go to the ER model, the emergency model where you’re-

Conrad Meyer (05:29):
Which nobody wants?

Rory Bellina (05:30):
No, no. I know that was a couple episode a couple of weeks ago, but no, that’s a-

Conrad Meyer (05:33):
So we’re heading in the right direction. You saw adult primary care visits jump about 31%, but when your baseline Medicare rate is already declining for physicians and you’ve got an 85% Medicaid rate shrinking, it’s still a problem. So hopefully, I mean, we’ll see. It’s going

Rory Bellina (05:51):
To be interesting. Yeah. I know there were some increases in the one big beautiful bill. It was a one year, two and a half percent increase, but still it’s very low. So I think that the takeaway is that there’s been a nominal decline in that Medicare conversion factor, inflation adjusted decline since 2011 and just there’s just a huge gap between the practice cost versus the payment costs. And like you mentioned, hospitals are getting reimbursed. They’ve gone up 70% while physician practices or physician pay down 26%.

Conrad Meyer (06:27):
And absolutely look, Congress keeps on applying band-aids. I get it. In 2023, they reduced the plan 4.5% cut to 2%. So they see the tsunami coming. 2024, they did a temporary 2.9% update for that year. And so in 2026 with a big beautiful bill that we just heard about, they gave a one-year, 2.5% bump, but these are all temporary. Yeah. So really, what are you hearing from your clients when we talk about this, if anything, about these decreasing reimbursements? How do they handle the year over year cuts? What’s driving them?

Rory Bellina (07:07):
I think my takeaway before we shift over to the next topic, because I know we’re limited on time with a lot of topics to cover today, is that I’m seeing more and more physicians, especially out of residency and fellowship going straight into the hospital setting and I’m seeing less and less 10 to 15 year physicians move from the hospital to start in their own practice. I’m just not seeing a lot of practices start up as much and I’m not seeing a lot of practices bring in a lot of groups anymore. It’s really going the other way. The hospitals are getting bigger and I think the prior practices are getting smaller.

Conrad Meyer (07:46):
And our next segment now, this is going to be interesting. This ties into it. So when you’ve got the administrative tsunami here, when physicians really are just simply

Rory Bellina (07:56):
Billing

Conrad Meyer (07:56):
Entities.

Rory Bellina (07:57):
We talked a lot about numbers and what we just covered on the reimbursement side. But yeah, I think the latest study I pulled this for our notes was physicians spend only 27% of their day on clinic time. On clinic time with patients, so 27%. Right. Yeah.

Conrad Meyer (08:16):
So what’s the

Rory Bellina (08:17):
Other

Conrad Meyer (08:17):
75? I mean, that’s crazy.

Rory Bellina (08:20):
I would presume it is all … I mean, I’m not sure, but I would presume it is all documentation, billing, catching up with medical records.

Conrad Meyer (08:29):
49%. You saw that? Oh

Rory Bellina (08:31):
Yeah,

Conrad Meyer (08:31):
49%. 49% on EHR work. And interestingly the numbers, 36.2 minutes on ER per EHR per visit.

Rory Bellina (08:42):
So

Conrad Meyer (08:42):
They’re spending 36 minutes on the EHR. Now I’m wondering, I

Rory Bellina (08:46):
Know- This was covered in an episode of the Pit actually. Oh, that’s right. The young resident who is like-

Conrad Meyer (08:53):
You do not get paid

Rory Bellina (08:53):
For the pay. I know. We don’t, but it’s a great show. But it brings up current topics. It does. And there’s that one, I guess she’s a second year resident now. They keep hounding her for being behind on her charting and dictation and she’s not seeing patients in the ER because she’s sitting behind a computer dictating notes.

Conrad Meyer (09:10):
So interestingly, who suffers here? The patients do, right?

Rory Bellina (09:14):
Absolutely. The

Conrad Meyer (09:15):
Patients suffer. I mean, I think the Commonwealth Fund calculated that the primary care physician would need to work literally 27 hours a day to complete all the recommended tasks and documentation requirements.

Rory Bellina (09:27):
That’s

Conrad Meyer (09:27):
Insane.

Rory Bellina (09:28):
Yeah. And like you said, there’s not time to do it. I think for so long physicians had a job where it was considered that you go in, you go into clinic, you treat your patients and you go home. But I think there’s definitely been a shift from that to where I know my physician provider clients are telling me that when they get home and after dinner and their kids are going to sleep, they’re hopping on Epic and they’re trying to catch up on notes. That’s crazy.That’s not what they signed up for.

Conrad Meyer (09:56):
And so right into that, and we’re going to talk about burnout in a little bit, but prior authorization has exploded. If you look at it, the 2024 AMA survey, the average practice completes 39 prior auth requests per physician per week.

Rory Bellina (10:12):
Yeah. So who’s doing that?

Conrad Meyer (10:13):
Right. And who’s reviewing that?

Rory Bellina (10:15):
Right.

Conrad Meyer (10:16):
Who’s reviewing it? Who’s doing it? That’s a third of a full work week, just getting permission to treat patients, get paid.

Rory Bellina (10:25):
And then you have the issue where the prior auth gets denied and you’ve got to do a peer-to-peer and you’ve got to schedule that and take an hour out of your day to schedule and get that done. Yeah. So here’s the interesting stat that I pulled. This was from MGMA’s 2024, one of their reports that 92% of medical group practices have hired or reassigned staff solely for prior auths.

Conrad Meyer (10:49):
That’s crazy.

Rory Bellina (10:50):
Just for prior authorization. So now you’ve got someone in your office who could be a nurse, they could be doing triage and rooming patients, but now they’re on the phone with insurance companies fighting for prior auths.

Conrad Meyer (11:02):
I just think it’s crazy. So when you look at the numbers, it’s just nuts. So not only do you have the prior auth numbers, but 40% of total hospital expenses are administrative. That’s crazy. So the administrative burden, and then it’s funny, and I had a graph where I was talking about hospital administrators and their boom over the last decade, which has been … The joke around physicians that I talked to is, how many administrators do we need to run a hospital? And laughingly, I mean, me being a former administrator,

Rory Bellina (11:32):
I

Conrad Meyer (11:32):
Laugh at that, but the burnout is real. The

Rory Bellina (11:35):
Burnout

Conrad Meyer (11:35):
Is real and the staffing costs are real. So now we’re having a billing tsunami.

Rory Bellina (11:41):
Yeah. So I think what ultimately happens is that you’ve got less patient care than you’ve got less doctors because they’re getting burned out with this and they don’t have the time in the day to treat in clinic and then go home and catch notes. It’s go home. It’s a double edged sword now.

Conrad Meyer (11:55):
They can’t do it. They can’t physically do it. So interestingly enough, 62 to 63% of the physicians cite too many bureaucratic issues as the number one case for burnout.

Rory Bellina (12:08):
I agree with that. I can’t disagree with that. Absolutely. No, I think that’s very fair. I think the biggest problem, and we’re going to get into it, is AI and these claimed denials based on AI, but that’s probably going to even make things worse because these AI systems could possibly be a heavy bias to them on the hospital side.

Conrad Meyer (12:30):
But then again, you have to ask the question about insurance companies because when you look at the numbers, right, 83% of the prior auth denials that are appealed succeed.

Rory Bellina (12:39):
83%.

Conrad Meyer (12:40):
83%.

Rory Bellina (12:41):
So that should tell you that these are being denied-

Conrad Meyer (12:46):
Systematically.

Rory Bellina (12:47):
Yeah.

Conrad Meyer (12:47):
Like

Rory Bellina (12:47):
Systematically. It’s almost like an automatic denial and then appeal and then you’ll get them.

Conrad Meyer (12:53):
But here’s the scary part, only 18% of the doctors appeal. So it’s almost like a purposeful, systematic way of saving money by purposely denying prior auths, forcing doctors to appeal and hoping that no more than 18% appeal so they don’t have to pay. That is just insane. How

Rory Bellina (13:15):
Is

Conrad Meyer (13:15):
That not … I don’t know. I mean, that just sounds fishy to me. I’m sorry.

Rory Bellina (13:19):
No, it does. It absolutely does.

Conrad Meyer (13:22):
Is that a DOJ thing? I mean, doesn’t that sound … I mean, I just felt wild.

Rory Bellina (13:27):
Yeah. I think that’s a Congress thing, but you know how this all goes. These insurance payers, they’re not going to …

Conrad Meyer (13:34):
The machine that runs the lobbying groups.

Rory Bellina (13:36):
Yes. Yeah.

Conrad Meyer (13:37):
We can have a whole whole segment on that.

Rory Bellina (13:40):
So let’s stay on that topic about the AI claims and aisles because everyone is using AI.

Conrad Meyer (13:47):
It

Rory Bellina (13:47):
Is. Every industry is using AI. They are. So how is AI affecting claims? Because I think it used to be in the past where you submit a prior auth, it goes to wherever it goes and it was landing on a person’s desk or a person’s screen, right? And there was an actual person that was reviewing it. I think those days are gone. Gone. I

Conrad Meyer (14:07):
Agree. Well, look at the numbers. Right. 83%. I mean, look, so in other words, if you have that kind of a success rate where you’re 83% of your prior auth denials are succeeding and overturning, that to me tells me the insurance company better wake up because there’s a problem.

Rory Bellina (14:24):
Yeah,

Conrad Meyer (14:24):
Absolutely.

Rory Bellina (14:25):
That’s an

Conrad Meyer (14:25):
Absolute problem. That’s a systemic problem. That’s not right.

Rory Bellina (14:28):
No. So UnitedHealthcare, this is one of the ones that I wanted to talk about their algorithm, I believe it’s NH for NaviHealth Predict, that is what UnitedHealthcare Optum, which is their subsidiary, acquired that for $2.5 billion and that algorithm is designed to help with post-acute care and SNFs and rehabilitation. Supposed to. Right. But it was supposed to be a prediction, but it’s really not. It’s more of a dictation now. And then there’s been some challenges to that.

Conrad Meyer (15:04):
Well, I think again, going back to the systemic issue now on talking about AI claim denials, which I think is important. I think insurance companies are banking on people not appealing

Rory Bellina (15:16):
It. Oh, absolutely.

Conrad Meyer (15:16):
Not don’t appeal it. We’re just going to outright deny it. Only

Rory Bellina (15:20):
18% are going to do it. They’re going to do it. So

Conrad Meyer (15:22):
We’re going to get-

Rory Bellina (15:23):
Four out of five are going to fall off.

Conrad Meyer (15:24):
We’re going to have an 82% success rate

Rory Bellina (15:27):
On

Conrad Meyer (15:27):
No one’s going to take it further, right? Yeah. And so to me, it’s baffling. Why are we paying for that? I mean, this is what you’re paying for.

Rory Bellina (15:36):
Right. You’re supposed to be paying for coverage, but no, that’s frustrating.That’s very frustrating. So the

Conrad Meyer (15:43):
Business model itself works because only zero, what, 0.2% actually appeal the claim. They don’t even do it. These are people, not doctors. So basically even with a 90% error rate, admittedly 90%, the math favors the insurer.

Rory Bellina (16:00):
Yeah. I know that. I know we’ve briefly talked about that at NH Predict and there was a case involved in that, but it’s not just United. I know. Cigna has something as well that automatically match procedures-

Conrad Meyer (16:15):
XDX.

Rory Bellina (16:15):
… against diagnosis and then denies the mix matches. A report came out though when I was reading, when I was doing the research for this. It explained that Cigna denied 300,000 claims in two months.

Conrad Meyer (16:30):
That’s insane.

Rory Bellina (16:31):
300,000 claims in two months- Imagine

Conrad Meyer (16:34):
The

Rory Bellina (16:34):
People. 300,000 claims couldn’t have been processed in a year if this were actually going in front of people.

Conrad Meyer (16:40):
Correct.

Rory Bellina (16:40):
But when you’ve got these LLMs that are running these claims, they could process much faster, but no, there’s no way. There’s no way.

Conrad Meyer (16:51):
Did you see the doctor from Cigna?

Rory Bellina (16:54):
No, what did he say?

Conrad Meyer (16:55):
Basically, if you took the 300,000 claims and just ran the numbers in two months, that is literally 1.2 seconds. Who can read?

Rory Bellina (17:06):
It doesn’t

Conrad Meyer (17:07):
Make sense,

Rory Bellina (17:07):
Right? So the computer’s doing it. Gone are the days when you submit a prior auth or a claim and someone is on the other side actually looking at it. That’s done.

Conrad Meyer (17:21):
When you pull the curtain back, it’s not being reviewed. No,

Rory Bellina (17:23):
It’s not. Absolutely not. It’s not. It’s physically impossible based on these numbers. It’s a

Conrad Meyer (17:28):
Rubber stamp to say

Rory Bellina (17:29):
Deny. To do it. And it’s a lot cheaper from these insurance companies perspectives to pay for these servers and this software to do it. And then if there’s an issue, then a person will deal with that. And then

Conrad Meyer (17:41):
You know what? It’s great. The plaintiff counsel, the plaintiff attorneys have picked up on this and they’re going after them. Oh yeah, absolutely. They’re going after class actions. I think Humana has one. This is Barrows versus Humana in December 2023 that basically alleged that Humana employees who deviate from the algorithm projections, they’re disciplined and terminated. How do you like that?

Rory Bellina (18:01):
Yeah. There was one against United where someone was denied SNF. He ultimately passed away and I think the estate finished with the lawsuit and actually this one was unique. It was a breach of contract over its policy because I believe the policy language said specifically that the coverage decisions will be made by clinical staff or physicians.

Conrad Meyer (18:25):
Well, let me tell you this.

Rory Bellina (18:27):
Clinical staff are physicians though, not an algorithm. And then if you appeal …

Conrad Meyer (18:32):
Well, look, I want to tell you, 2024 CMS recognized this. They stepped up and issued some regulatory guidance that said that algorithms can assist in coverage determinations, but they cannot solely dictate coverage decisions.

Rory Bellina (18:45):
But that’s too gray to me. I think it’s great too. It’s not enough

Conrad Meyer (18:48):
Teeth.

Rory Bellina (18:50):
Because you say it cannot solely dictate- What does that mean? The decision must be based on … But that tells me that if you have someone that just glances over it very quickly, “Oh, well, the algorithm didn’t solely do it. ” I think that’s not enough. I know CMS probably doesn’t get-

Conrad Meyer (19:08):
Well, it’s not just CMS. So states are not getting involved. You saw California’s-

Rory Bellina (19:11):
California has a big- SB

Conrad Meyer (19:13):
1120.

Rory Bellina (19:13):
Yes. They have a big one for AI and that was denying or modifying coverage based solely on an algorithm is prohibited in California at least.

Conrad Meyer (19:24):
And look, other states are coming. Arizona, Connecticut, Maryland, Nebraska, Texas all have passed similar restrictions.

Rory Bellina (19:30):
I think Louisiana, my notes showed that it was House Bill 114 that was from last year. Same thing, same concept as California with civil penalties in place.

Conrad Meyer (19:41):
So the scale of this is crazy.

Rory Bellina (19:43):
Yeah.

Conrad Meyer (19:43):
It’s crazy. 53 million prior auth requests were submitted to Medicare Advantage programs just last year.

Rory Bellina (19:50):
Sure. So my question though for you is-

Conrad Meyer (19:53):
Imagine the automatic denial of all that.

Rory Bellina (19:55):
Right. My question for you though is the numbers of prior auths, let’s say they’re relatively the same. Maybe they go up a little bit year over year based on just having more paper. Yeah,

Conrad Meyer (20:06):
Just the

Rory Bellina (20:06):
Claims data, right? I’m with you. Let’s say that’s the same. So they’re getting, at least with the AI algorithm, these claims are getting processed faster. Now they’re getting denied faster, but is there any benefit to patients that at least their claim that would’ve taken six months for a human to review, it’s now getting denied in a week, but then you start the … My question to you is, do you think there’s any benefit to the machines that, hey, we know it’s going to be auto denied, but then we’re already ready for the appeal?

Conrad Meyer (20:38):
No. Why? No, no. I don’t think it’s any benefit because they’re banking on people not appealing. They’re banking on people not appealing. I

Rory Bellina (20:45):
Agree with that. They’re banking

Conrad Meyer (20:46):
On doctors not appealing. So I think it’s built into their model.

Rory Bellina (20:49):
I agree with that, but my point is, is it almost faster now for the AI model to auto deny you and then you get your appeal maybe even faster than you would have gotten it initially reviewed by a person under the old model?

Conrad Meyer (21:05):
Here’s my question.

Rory Bellina (21:06):
Trying to find a silver lining here.

Conrad Meyer (21:07):
What’s silver lining? What are you paying for?

Rory Bellina (21:10):
That’s true.

Conrad Meyer (21:11):
What are you

Rory Bellina (21:11):
Paying

Conrad Meyer (21:11):
For? Let’s just say this, how about this? You go lease a car, right? You’re paying every month for that car. What happens if the auto dealership just says we’re going to have that car fail automatically in a month on you and then you’re like, but I’m paying a lease payment.

Rory Bellina (21:32):
Shouldn’t

Conrad Meyer (21:32):
You do something? No, because the failure is going to be outside the scope of the lease. Or you’re going to have to appeal

Rory Bellina (21:38):
To us. You also appeal it. Yeah. Right.

Conrad Meyer (21:40):
I mean, are you kidding me?

Rory Bellina (21:41):
No, I’m just-

Conrad Meyer (21:42):
So it’s the same, maybe not the greatest analogy, but I mean, I think it’s if you’re paying a premium for coverage and you’re paying good money for that, that’s people that pay hard earned money, should they be subject to an automatic denial when their health is on

Rory Bellina (21:57):
The line? No, they should not be. And I think the goal behind using AI on these claims was to speed things up. And my only point was, is it speeding it up to where maybe you’re getting your result … You have to go through another step, but you’re getting your answer faster. I don’t know.

Conrad Meyer (22:14):
I don’t know. I think the systemic denial on prior

Rory Bellina (22:18):
Auths- That’s a problem. I completely agree. I agree

Conrad Meyer (22:21):
With that. I just don’t know. I can’t see the silver lining in something that hard-earned Americans have either earned or paid for to have them simply auto denied by Jarvis, sorry, Jarvis, or whatever AI you’re using, whatever algorithm, whatever acronym you’re using, I think that’s a travesty. I do and enforcing those people to do that. And enforcing doctors to do that and spend all that time … Another reason why you’re not seeing these independent practices,

Rory Bellina (22:52):
Another

Conrad Meyer (22:53):
Reason.

Rory Bellina (22:53):
Well, let’s talk about that. Let’s talk about independent practices and why it’s so harder. It’s so much harder now for an independent practice to survive. Well, everything we’ve just talked about has all takes … In the last segment we just mentioned, you’re hiring more and more staff to handle these auto denials and these reviews. So

Conrad Meyer (23:12):
Wait, think about that stuff, the tsunami, right?

Rory Bellina (23:14):
Yeah.

Conrad Meyer (23:14):
Declining reimbursement. Overburdening administrative EHR documentation to

Rory Bellina (23:21):
Just simply bill- Lower reimbursement rate, denial priority.

Conrad Meyer (23:23):
Auto denials.

Rory Bellina (23:24):
Yeah.

Conrad Meyer (23:25):
Right. I mean, what’s an independent practice look like if they

Rory Bellina (23:29):
Exist? I think it’s very hard. They probably have a very high payroll amount because they’re having to deal with all these things. Now hospitals can handle that. Hospitals can absorb that most likely because they probably are using AI themselves. But a small practice, that’s why we’re seeing the … But

Conrad Meyer (23:47):
Then you have to fight hospital in terms of compensation, because again, hospitals have been getting the auto increase, doctors have it, right?

Rory Bellina (23:58):
And they notoriously pay well.

Conrad Meyer (24:00):
Pay more? Well, they pay lower. Well, what I’m saying is that the hospitals are able to afford to give physicians higher compensation. So it’s driving doctors out of practices into hospitals because practices can’t compete with systems on reimbursement. Why? Part of the reason is because CMS is not giving the physicians the bump as hospitals. That’s part of the reason. And then you’ve got all the administrative stuff we talked about. So when I tell you it is a unicorn, it is not for the faint and heart for a physician to try to go out and do independent practice.

Rory Bellina (24:35):
So 2012, 60.1% of physicians were in private practice. So a little bit more than half. Okay.

Conrad Meyer (24:43):
Look at it now.

Rory Bellina (24:44):
12 years later, the latest data, end of 2024, it’s down to 42%. So a loss of, call it 18%. Almost 20%? Define in 12 years. So you’re losing about a litle bit more than a percent every year. We’ve lost about a percent every year.

Conrad Meyer (25:01):
Oh, more than that.

Rory Bellina (25:04):
77% of all physicians are now employed.

Conrad Meyer (25:08):
And

Rory Bellina (25:08):
So by

Conrad Meyer (25:09):
Some corporate machine, now put that in perspective,

Rory Bellina (25:12):
Whether

Conrad Meyer (25:12):
Or not whatever you think about that.

Rory Bellina (25:15):
Yeah. And I think there’s a huge acceleration in it during COVID. I know that there was a big increase in employed physicians because the hospitals needed it so they were paying whatever they needed to pay and that kind of changed the market.

Conrad Meyer (25:28):
So who loses that even more? I think rural areas really get hit. I mean, you’re talking about rural hospitals where the number of independent doctors have declined literally by 43%.

Rory Bellina (25:41):
Yeah. So the same metric from 2019, there were about 20,000. Now we’re down to about 12,500 as of the 2024 numbers. So that’s about a closure of about 300 rural practices. And when that happens and you’ve got people that have to drive an hour to a hospital, they’re not going for preventative care. They’re not going for that annual screening. They’re just going to show up to the ER when it’s a major issue.

Conrad Meyer (26:08):
That is a major issue. And that’s another problem with access and delivery, right?

Rory Bellina (26:12):
Yeah.

Conrad Meyer (26:12):
So when AMA asked the physician-

Rory Bellina (26:15):
Oh yeah, these were good questions. You saw this? Yes.

Conrad Meyer (26:17):
Who sold their practices in the last 10 years and why did they do it? What

Rory Bellina (26:21):
Was the number one reason?

Conrad Meyer (26:22):
There’s a 70, what? 70.8% cited inadequate payments. So that’s reimbursement. We hit on that.

Rory Bellina (26:29):
Okay. That makes sense.

Conrad Meyer (26:31):
64.9% say they wanted to improve access to costly resources. 63.6% say they need help managing the payers, the regulatory and administrative requirements. That’s the prior auth.

Rory Bellina (26:44):
So is there everything that we’ve talked about? So they’re getting low paid, that was reasonable. They needed access to costly resources so everything has gone up in price and they can’t afford the equipment or the supplies or the DME. And then after that, they need more staff and they can’t afford that as well. So because of the denials and the prior auth issues. Okay.

Conrad Meyer (27:05):
So how does it affect people? And so when you move that much of the provider force into corporate entities, and we’re going to get into private equity in a minute, but what happens, and I found this very, very interesting, what do they give up? And when you look at it, the Physicians Foundation actually surveyed this and 67% of the physicians in independent practice when they moved, they had significant autonomy and clinical decision making, but then when they move, do they have that?

Rory Bellina (27:33):
No, no. Well, it goes back to what we started this conversation with and I forgot the number already, but it was the amount of time that these providers get to spend with their patients. I think that’s ultimately when they give up. When you leave your private practice and go work for a big system, you get metrics. Well, absolutely you do. You get metrics like a restaurant or a bar gets their point of sale reports that show how effective you were, how much money you made, how much money you lost, what your average consult was.

Conrad Meyer (28:05):
So look,

Rory Bellina (28:05):
67%

Conrad Meyer (28:06):
Of independent physicians said they had clinical autonomy. You know what that number is for hospital-based physicians, meaning employed physicians?

Rory Bellina (28:12):
It’s got to be much lower than- 38%. So half. Yeah.

Conrad Meyer (28:16):
I

Rory Bellina (28:16):
Mean,

Conrad Meyer (28:16):
Not even a half, a third. So you’re telling me, that means 62%-

Rory Bellina (28:21):
Because they have no say so- I

Conrad Meyer (28:22):
Have no say so, and that’s how they feel.

Rory Bellina (28:24):
They have no say so the scheduler could be someone out of state.That’s a huge gap. It’s a computer scheduling their clinic so they have no say so over, “Well, hold on a second. I know Rory’s coming in and he likes to talk a lot so let’s block off 30 minutes for him.” No, Rory’s appointment is blocked off for six minutes.

Conrad Meyer (28:43):
Exactly. And then of course you walk in and you’ve got, “Hey, I’ve got 30 patients today and I’ve got five hours to see him.”

Rory Bellina (28:48):
And I haven’t done any notes today.

Conrad Meyer (28:51):
I can’t have done my EHR, right?

Rory Bellina (28:52):
And I have to come back tomorrow.

Conrad Meyer (28:53):
So when you think about it, 61% of employed physicians have limited also freedom to make referrals outside of the system.

Rory Bellina (29:03):
Oh yeah. Oh yeah. I see it all the time in the big hospital systems here where it says- They have to

Conrad Meyer (29:07):
Refer all in network.

Rory Bellina (29:08):
All in network unless-

Conrad Meyer (29:10):
Patient

Rory Bellina (29:11):
Wants it

Conrad Meyer (29:11):
Or we don’t have the services.

Rory Bellina (29:12):
All the regulatory language, right? All the

Conrad Meyer (29:14):
Buzzwords, right? And let me tell you, if they do refer, I guarantee you they’re getting coached.

Rory Bellina (29:18):
Oh yeah, absolutely. They’re

Conrad Meyer (29:19):
Getting a talk to you by the principal.

Rory Bellina (29:20):
They’re

Conrad Meyer (29:21):
Going to be putting detention.

Rory Bellina (29:22):
Hey, why isn’t Conrad having … You referred him for surgery at this outpatient surgery center. Why isn’t he doing it at the hospital?

Conrad Meyer (29:28):
They put him in peninsula

Rory Bellina (29:29):
Or even

Conrad Meyer (29:29):
Worse. They might even decrease their pay or the next year.

Rory Bellina (29:32):
They shouldn’t, but they will.

Conrad Meyer (29:33):
They will. They will. And look, and here in Louisiana, we’re watching this play out in real time. We have some of the big systems here and I got to tell you, it’s interesting to watch the movement of physicians in an independent practice.

Rory Bellina (29:47):
It’s concerning. I think they’re talking about AI and speeding things up. I know one of our big systems has AI recording in the rooms now to help- Yeah, there’s

Conrad Meyer (29:57):
No more scribers.

Rory Bellina (29:57):
There’s no more scribers and now you just Have your consultant records and goes into your record and the doctor reviews it. I think that’s to help because they’re scheduled so fast. But is it all really making it in there or is it missing

Conrad Meyer (30:10):
Something? So we have another option. Doctors have another option. So if you want to brave the world and independent practice or you don’t want to go in a hospital, but then say you want to finally get your golden parachute,

Rory Bellina (30:23):
You got

Conrad Meyer (30:23):
Private equity.

Rory Bellina (30:26):
You’ve ran the practice for 30, 40 years. And this is

Conrad Meyer (30:29):
Geared to more older physicians.

Rory Bellina (30:30):
Older physicians, correct.

Conrad Meyer (30:32):
And this is

Rory Bellina (30:32):
Very

Conrad Meyer (30:33):
Interesting.

Rory Bellina (30:33):
Unless you get lucky and you start a practice and you get a home run, but it’s most likely not worse. For our younger doctors and our

Conrad Meyer (30:40):
Sort of younger or mid-level doctors in terms of your age and

Rory Bellina (30:43):
Seniority,

Conrad Meyer (30:45):
You’re not going to like this.

Rory Bellina (30:46):
No, you’re not. Now you’re employed. You’re employed by a mini hospital now.

Conrad Meyer (30:49):
You’re employed by, again, metrics

Rory Bellina (30:53):
And your own

Conrad Meyer (30:53):
Private practice

Rory Bellina (30:54):
And a total

Conrad Meyer (30:55):
Metrics.

Rory Bellina (30:56):
Yeah. Look, it’s a huge shift. I think- What are we

Conrad Meyer (30:59):
Looking at number wise?

Rory Bellina (31:00):
All right. So there’s been a sixfold increase based on private equity deals from 2012 to 2021. That’s insane. Sixfold increase. That

Conrad Meyer (31:10):
Is

Rory Bellina (31:11):
Insane. In 2025, there was 150 buyouts, 664 add-ons and 214 investments. So global healthcare PE deal value hit a record of $190 billion last calendar year, $190 billion in healthcare, private equity. It’s unbelievable. And the model is typically the same that I’ll let you discuss.

Conrad Meyer (31:39):
So in other words, the modeling show, this is why the older doctors like it. They come in and you know this, you’ve seen this, it’s a beauty pageant. And they come in and they tell these older guys, “We’re going to give you 13X, 14X on your EBITDA.” And the older guy’s like, “What? Oh, what? 14X, right?” And then so they do the hook, they get them in.

Rory Bellina (32:02):
And look at the books. They look

Conrad Meyer (32:02):
At the boks

Rory Bellina (32:03):
And say- Wait a second.

Conrad Meyer (32:04):
Wait a minute, wait a minute. We’re going to go down to seven, 8X.

Rory Bellina (32:08):
And we’re going to pay off all this debt that we talked about.

Conrad Meyer (32:11):
And we’re going to finance the debt through our payment to you. So that’s now going to come down to maybe 4X.

Rory Bellina (32:16):
And we’re going to need you to stick around for like three to five years- To help

Conrad Meyer (32:20):
Transition.

Rory Bellina (32:21):
… to make sure that all the patients stay and if they don’t all stay, we’re going to need some of that money back.

Conrad Meyer (32:27):
So basically when it comes down to the numbers, the private equity firm is putting up a fraction of the purchase price because they’re financing it through the debt. It’s all debt. Yeah. And then loads it onto the practice deal, post deal. And so then all of a sudden now you’re working for a metric on a debt finance deal. It’s a marriage. It’s a hell marriage. Yeah,

Rory Bellina (32:50):
It

Conrad Meyer (32:50):
Is. And most of these docs don’t, especially the younger ones in the mid level, because they’ve seen guys like, “Man, I got two or three years. This is my golden parachute. That’s great. I’m out of here.” Right? Terrible. Terrible.

Rory Bellina (33:01):
I think unfortunately you’ll see where there’s been a lot of bankruptcies- Yeah, for the debt. For the debt because these private equity deals will come in, they’ll buy it, the doctors realize this is a horrible deal and then private equity doesn’t care. They’ll just sell it off and close practice. And so now those doctors that built up in that community and their reputation and sponsored the little league T-ball teams, that’s all gone. All that stuff is gone now.

Conrad Meyer (33:26):
And so we’re seeing a lot of this. I got to tell you, it’s really, really tough. And I don’t know if the doctors are in the middle of it.

Rory Bellina (33:35):
And it’s the same concept with working for a hospital. It’s the same thing with working within the hospital. It’s all about patient outcomes. When you’ve got private equity breathing down your back, they’re going to tell you, “Hey Conrad, I saw you spent 30 minutes with Rory today and we lost out on four other patients that- “

Conrad Meyer (33:53):
Could have been

Rory Bellina (33:54):
Higher

Conrad Meyer (33:54):
Reimbursed.

Rory Bellina (33:55):
Isn’t terrible. We’re going to need you to … Or you spent too much time with Rory. He was in for a hangnail. You should have spent more time with Joe because he needed surgery. That’s what’s going to happen to

Conrad Meyer (34:06):
You. And you’re seeing that already. You

Rory Bellina (34:07):
Saw the annals of

Conrad Meyer (34:08):
Internal medicine saw a 13% increase in emergency room department mortality after PE acquisition. Wow. That’s a lot.

Rory Bellina (34:16):
Yeah.

Conrad Meyer (34:17):
I mean, that’s a lot. You talking about going after the dollar?

Rory Bellina (34:21):
Yeah. Yeah, because they’re going to buy hospitals just like they buy

Conrad Meyer (34:24):
Practices. And that’s not just the ED. So look, 11% increase in nursing home mortality after PE acquisition. And right now, just so you know, Louisiana has supposedly, and I haven’t run the actual double check on this, but 27 PEO and hospitals second in the nation allegedly. I didn’t know that either. I have to look at it. I looked at the data. I’m like, wow, that is really interesting.

Rory Bellina (34:50):
But it makes sense when PE comes in, they’re going to run it leaner. They’re going to have les people. They’re going to have probably lower quality equipment, machinery, DME, those type of things. It’s all going to come

Conrad Meyer (35:01):
In. It’s almost

Rory Bellina (35:01):
Like those

Conrad Meyer (35:02):
Slum landlords that

Rory Bellina (35:03):
We hear about.

Conrad Meyer (35:04):
That’s

Rory Bellina (35:04):
Exactly what it is.

Conrad Meyer (35:05):
Slum landlords, literally bandaid and fricking duct tape.

Rory Bellina (35:10):
Yeah, because it’s cheaper. It’s cheaper to the shareholders up top.

Conrad Meyer (35:14):
So look, I’m going to wrap this up. This was really important. I came to Rory this morning and I said, “Let’s do something about the changes in healthcare over 10 years.” And I could tell you, I don’t know where the bubble’s going to burst, but I could see the bubble now.

Rory Bellina (35:28):
Yeah. I think that we’re still going down this path where doctors are getting burned out. They’re being asked to do more for less money in a quicker amount of time and AI is not going to be able to replace a doctor.

Conrad Meyer (35:42):
And I agree with that. I want to tell you this and I want our listeners to know this and we never really do this, but I think we’re going to start changing this because I do get the questions. But if you’re a listener and you’re a physician and it’s affecting you and these things that we’re talking about have affected your practice, affected you, you have some issues with navigating reimbursement strategy, prior auth problems in your practice, evaluating contracts, even a private equity acquisition, call us, call Rory, call myself because we’re here to help.

Rory Bellina (36:15):
Yeah, you come on the show, we could talk about it.

Conrad Meyer (36:16):
We could do that too. We could do that too. And look, if there’s a health law topic you’d like us to tackle in a future episode, we want to hear from you. We don’t want to just spill out our little guts. We want to hear what is important to you and so you can reach us directly. You can have it over to our website, www.shahardy.com. Reach us out directly if you want. You have our emails, our phone numbers. And look, if you found this episode helpful, give us that good five star rating on Apple, Google, Spotify, all those fun things. Until next time, thanks again for joining us on Health Law Talk. Have a great day.

Rory Bellina (36:49):
Thank you.

Introduction (36:51):
Thanks for listening to this episode of Health Law Talk presented by Chehardy Sherman Williams. Please be sure to subscribe to our channel. Make sure to give us that five star rating and share with your friends. Chehardy Sherman Williams is providing this podcast as a public service. This podcast is for educational purposes only. This podcast does not constitute legal advice, nor does this podcast establish an attorney-client relationship. Reference to any specific product or entity does not count as an endorsement or recommendation by Chehardy Sherman Williams. The views expressed by guests on the show are their own and their appearance does not imply an endorsement of them or their entity that they represent. Remember, please consult an attorney for your specific legal issues.