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The Goodman Institute Health Blog

The Demise of Primary Care is Due to Third Party Payment

Posted on March 19, 2026March 17, 2026 by Devon Herrick

Primary Care is in trouble, or so says the Kaiser Family Foundation (KFF). It is not easy to find a primary care physician if you do not already have one. A lot of primary care practices are closed to new patients. Others are closed to some new patients depending on their health plan. This is especially true for Medicare and Medicaid beneficiaries. 

Few medical students want to go into primary care, since it pays less than specialties. It can also be frustrating, having to cycle through 20, 30 or even more patients per day. If you allocate 15 minutes per patient, that equates to about 30 per day but that also means reviewing a patient chart, following up on earlier appointments, ordering tests, reviewing results, etc. All must fit into that same 8-hour day. Charting patient encounters, writing or reviewing physician notes on each visit… it is easy to see how seeing four patients an hour is an overly ambitious goal. Yet, most doctors I have talked to over the years report enjoying primary care, but only if they’re able to spend sufficient time with each one to really treat their needs without impoverishing themselves in the process.

KFF Health News reported on Valley Medical Group practicing in western Massachusetts.

Valley has 90 medical providers — including doctors, nurse practitioners, and physician assistants — and on-site labs, X-rays, and vision care. With tens of thousands of patients, it’s become one of the largest independent practices in western Massachusetts.

It forms a key part of the region’s health care infrastructure, yet Valley Medical has rarely been under more strain than it is now. In January, the practice laid off 40 employees — 10% of its 400-person staff — mostly in support positions.

Primary care physicians complain that low reimbursements make staying afloat difficult. Low reimbursements for primary care from government insurers (like Medicare and Medicaid), and low reimbursements from private insurers and employer plans need to increase, they argue. 

“It has to do with the fact that our contracts don’t pay as well as we think they should,” Carlan said. “The cost of everything is going up.”

Valley Medical Group is far from alone in this predicament. Thousands of primary care practices, a key gateway to the medical system, are fighting to remain financially viable — and independent.

To boost their negotiating power, primary care physicians in the Connecticut River Valley banded together like a union with collective bargaining. Sadly, many family physicians have thrown up their hands and went to work for hospitals, which reduces their autonomy and means their primary goal is to please their employers rather than their patients. 

The road to accessible primary care should not depend on third party payers hiking reimbursements or allowing hospitals to jack up costs by controlling physician care. Rather, third party payment is what got primary care physicians into the income squeeze. Two-thirds or more of physician revenue is lost due to overhead, billing & collections, office rents, and clinical staff. Direct patient care, cash-based practices, and direct primary care are ways to reduce clinical overhead by 65% or more. For instance, there is a medical office complex near my home that staffs a clinic with support personnel and medical supplies. Physicians rent exam room space by the hour, day, or week. Alternatively, several physicians could practice together and share office space without the large support staff. Some practices even charge low monthly membership fees for easy access to their services. 

Physicians have become so enmeshed with third party payment they do not realize there is any other way. Years ago, my doctor was out of town when I called the office. His office staff referred to another physician who was covering for him. That doctor only took cash. He would not make appointments. His office schedule was first come, first served. The waiting room was full, yet my waiting time was less than 20 minutes. He spent 10-to-15 minutes examining me and my cost was only $35 (in the early 1990s). My wife has several doctors who do not take her insurance (or any insurance in some cases). Her primary care physician charges her less than $60 (in cash) for a 10-minute office visit. I wish more doctors would practice like that.

Read more at KFF Health News: Primary Care Is in Trouble. So Doctors Band Together To Boost Their Market Power.

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For many years, our health care blog was the only free enterprise health policy blog on the internet. Then, when the NCPA closed its doors, the health blog stopped as well.

During this five-year hiatus no one else has come forward to claim the space. So, my colleagues and I have decided to restart the blog in connection with the Goodman Institute. We invite you and others to use this forum to share your views.

John C. Goodman,

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