A Question of Value

Three prominent surgeons from three different specialties talk about how the seemingly endless string of yearly physician pay cuts from CMS is impacting the profession they love.

Physician pay, specifically the fee schedule in which CMS reimburses providers for services, is at an inflection point right now. Between inflation and perpetually declining Medicare cuts, there is a desperate need for reform in this area. The physician pay issue is already having major implications for the entire the ambulatory surgery center industry. Outpatient Surgery Magazine recently sat down with a panel of surgeons who have unique insights into the pay problem for a passionate discussion on what physician pay cuts have done to providers and their practices, how we got here and what comes next.

(Note: Panelists’ responses were lightly edited for clarity and space.)

The Discussion

OSM: How would you describe the physician pay landscape in the ASC marketplace right now?
Betsy Dovec (BD): I think the rising costs of business for private practicing surgeons, paired with decreasing reimbursement rates, is definitely concerning. For hospital-employed surgeons, this could result in a decrease in overall compensation, particularly if they are on a productivity-based RVU incentive compensation model where their earnings are primarily tied to the professional/surgeon fees collected. In my sector, the bariatric surgery pay landscape in ASCs is uniquely challenging. With CMS classifying many of our procedures — such as Roux-En-Y Gastric Bypass and Sleeve Gastrectomy — as inpatient-only, we’re currently missing out on the potential for those insured by Medicare and Medicaid to offer these surgeries in the ASC setting, which could provide a more cost-effective option for patients and physicians alike. Private insurers often follow CMS’s lead in terms of reimbursement, so the barriers aren’t limited to just Medicare patients. This, combined with ongoing fee cuts and reimbursement stagnation, makes it difficult to maintain the type of compensation that allows surgeons to focus on patient care without worrying about financial sustainability.

Hunter Newsom (HN): Most physicians make their money on percentage of revenue, whether it’s 20%, 25%, 30% or whatever that percentage is. As the fee rate drops [2.8% in 2024], physicians make less on average, which is problematic in itself, but even more concerning when you zoom out and look at what’s been happening. In the aggregate, physicians are making around 30% less than we were 20 years ago. Essentially, the value of what we as physicians do is plummeting. CMS is telling us they don’t value physicians’ services. In this country, we judge value on the dollar or the cost we’re willing to pay for things. Every year, physicians are getting the message that we value your service even less. And yet, even as our contributions are being repeatedly devalued, we are working on the most valuable item there is — the human body. If we value health, it’s not represented in what we are willing to pay for it.

Every year, physicians are getting the message that we value your service even less.
Hunter Newsom, MD

Shakeel Ahmed (SA): As we are all well aware, the greatest disservice done to the ASC market over the last two decades is its dissociated, disjointed payment system that did not adjust for inflation for most of the current century so far.  Simply put: We lagged more than 10% behind inflation. To make things worse, the cost of doing business keeps going up, as is the nature of things. That diverse fiscal situation has created a very tenuous profit and loss market for outpatient surgery. To stay afloat, we are forced to hand-pick specialties and procedures, to the detriment of some. This is a travesty, because ASCs are such efficient vehicles of care that it’s a crime not to fully utilize our potential.

OSM: In what ways are physician fee cuts impacting surgery centers?
BD: The year-after-year fee cuts are already putting significant pressure on the margins of bariatric surgery practices and professional fee reimbursement. If we could bring more of our bariatric cases into the ASC setting, it would dramatically reduce costs, increase access for patients, and allow us to operate more efficiently. But because CMS keeps our CPT codes on the inpatient-only list, we’re limited in our ability to take advantage of the more cost-effective ASC environment. For bariatric surgery in particular, this impacts not only physician pay but also the patient experience. Many of our patients could be great candidates for outpatient surgery, with enhanced recovery protocols and same-day discharges. However, the current reimbursement and procedural landscape prevent us from utilizing those benefits in ASCs for all qualified patients.

HN: The focus of practices is increasingly being centered on what can be done to grow non-insurance-based care or out-of-pocket care that patients are willing to pay a little more for. Your commercial payers are tied to Medicare, the entity that keeps reducing fees, and you can’t negotiate with those payers because they are going to follow the fees set forth by CMS. That’s how it is. If companies like Amazon and Walmart couldn’t negotiate with payers, then how can your one-OR surgery center or small group practice ever be able to do so? That means practices are finding creative ways to make money. In my service, that means the optical business of glasses and contacts, cosmetic procedures like eyelid surgery, premium IOL cataract procedures and dry eye disease. These are the areas we can charge for and expect a reasonable return.

SA: It’s interesting to note that while physicians fee cuts are not economically tied to ASCs, consumer sentiment is a trickle-down effect, and healthcare is not immune to it.  Most physicians have fixed, or even escalating, overheads. In order to manage their overheads, they usually end up working more to compensate for these cuts. While on its face that seems to bode well for surgery centers, in truth the extra business a surgeon will take on usually comes in the form of call coverage or inpatient care, and the net effect slows their elective surgery business down. This in turn leads to fewer cases at ASCs, and potentially lower investment in technology and innovation.

SHOVELS & ROPE Dr. Elizabeth ‘Betsy’ Dovec at the site of her de novo surgery center, The Surgical Institute of Central Florida, says she’s gained an even deeper understanding of the evolving landscape of bariatric surgery, particularly within the ASC space.  |  Scott Sigman

OSM: How are providers responding to the pattern of yearly physician pay cuts?
BD: As a provider, I’ve seen firsthand how bariatric surgeons are trying to offset these cuts. Some are pursuing joint ventures or partnerships with hospital systems, but these arrangements often limit the independence that many surgeons value and can feel like a concession to a flawed system. We are focusing on innovation and efficiency, creating pathways to make bariatric care more accessible and affordable while still providing top-tier outcomes. We also closely monitor new developments in CMS regulations and are constantly advocating for changes that would allow for more of our procedures to be performed in the ASC setting.

HS: At some point for some practices, it’s a losing business. The biggest thing I’ve seen is that practices are becoming financially not viable because of these trends we’re talking about. We’re talking about a direct reduction in what you make, and what we’re seeing is some of the older physicians, those who had initially planned to practice until a certain date, looking at what’s happening and deciding to retire a bit earlier.

SA: Speaking from personal experience, one of the first things physicians do when faced with persistent pay cuts and financial stress, is to consider consolidation and mergers. That leads to more effective bargaining strategies, and better payer contracts. In addition, diversifying revenue streams is the go-to for a business-savvy physician in such situations, including exploring partnerships in surgery centers and imaging facilities. Of course, the logical third step is lobbying and voicing your discontent, but unfortunately that remains a weak weapon in the hands of doctors, and thus an inefficient vehicle, as we are sadly aware.

OSM: What can be done to improve a physician pay landscape that a vast majority of providers feel is flawed and problematic?
BD: To fix this flawed landscape, we need real action on multiple fronts (See Real Action, Real Results): We need CMS to update the Inpatient-only list; we, as surgeons, need to to advocate for fair reimbursement, embrace efficiency and diverse revenue streams; and the industry needs to shift toward alternative payment models and greater negotiation and transparency.

HN: In ophthalmology, centers and practices are going to focus on their premium IOL cataract and Lasik cases, where patients pay more out of pocket for service. In this market, ASCs must not only deliver outstanding care and results, but also a superior overall patient experience. If you don’t deliver the right results as a surgeon, you will never be able to increase the value. If patients are willing to pay $10-15K out of pocket, then surgery centers must be willing to accommodate those patients and promote a VIP experience in every aspect of care. It’s all about an increasing the overall experience and providing superior care, superior service and, of course, superior outcomes.

SA: I could write a book on this question. Actually, I did. In a nutshell, I would propose a few steps. One, diversify, diversify, diversify.  It’s not enough to know how to treat a patient anymore. You must act as a savvy businessperson to sustain a healthy practice. ASCs, telemedicine, labs, imaging centers, multiple clinics  — diversify.

Second, for the love of God, someone get Medicare to eliminate the budget neutrality rule. We need to stop robbing Peter to pay Paul. Healthcare spending does not have to be a zero-sum game. Nothing is more important than our health. If supplementing its costs means borrowing from other facets of our national expenditure, then so be it. Third and foremost, reduce our administrative burden. A huge part of our expense, both in terms of time and money, is on time wasted on administration and paperwork. Remember, there was life before EMR. Hospitals weren’t shutting down with morbidity when all we had in our hands were a pen and a stethoscope.

Maybe it’s time to revisit simplicity. OSM