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Challenges with Insurance in Private Medical Practice

By Colar Kuhns, DMD-MPH Candidate at A.T. Still University

From Print Issue - Fall 2022
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Medical practice has been changing rapidly over the last decade. Some of the most notable issues facing physicians in private practice include rising administrative burdens, lack of negotiating leverage with insurance carriers, high IT costs, and difficulty in physician recruitment. The COVID-19 pandemic has amplified these challenges among physicians who have recently completed residency or fellowship training and enter private practices where the pressure of managing finances in addition to gaining more clinical proficiency are equally felt. Experienced physicians are also aware of low and falling reimbursement rates, which has manifested in fewer physicians opting to remain in private practice.


The major private medical insurance carriers offer­ing individual and family health coverage in Arizona include, at least, Arizona Complete Health, Banner Health/Aetna, Bright Health, Blue Cross Blue Shield of Arizona, Compass Rose Health Plan, Cigna, Health Net

Federal Services, Medica, Oscar Health Plan, Humana, and United HealthCare. As of 2019, roughly eleven percent of Arizona’s population did not have medical insurance, forty-five percent reported employer spon­sored medical coverage, and twenty-seven percent had either Medicaid, Medicare, or a combination of the two.


Multiple polls have been conducted to determine physician’s views of insurance carriers. One poll of over six hundred physicians responded with concerns that insurance companies are increasing the cost of health care, interfering with their professional judgement by guiding treatment plans, and enforcing policies that compromise patient health. Additionally, roughly forty-five percent of polled physicians believe insurance has lowered patient confidence in the care providers offer and surprisingly nearly sixty-seven percent of physicians would not recommend a career in medicine. As medical practices largely partner with private insurance carriers, understanding the basis of the provider-carrier relationship provides insight for strategies to maximize a practice’s profitability while reducing provider frustration.



The trend of medical practice consolidation in the face of insurance carrier consolidation is an issue that causes many of the financial challenges physicians face in private practice. Physicians contractually partnering with other physicians into a single taxable entity has been defined as horizontal consolidation, whereas hospitals or hospital systems acquiring a physician’s practice is known as vertical consolidation. Both horizontal and vertical consolidation have been shown to increase physi­cian prices, regardless of the concentration of physicians within a state’s county. However, when insurance carriers consolidate, physician prices lower as insurance premi­ums increase, which can be problematic for physicians in larger Arizona cities such as Phoenix, Tucson, Mesa, Chandler, or Glendale.


A health insurance market that has limited insurance carrier competition with a large patient pool gives carriers leverage to restrict physician prices, especially when consolidated hospital systems compete against smaller practices for the market share of patients. Inherently, private equity has capitalized on vertical consolidation, increasing hospital system revenue through increased patient prices. Additional challenges with com­mercial insurance are inherent to the contract between a provider and a carrier.


When a provider joins a carrier’s network, the contractual agreement exchanges access to the carrier’s patients for acceptance of the carrier’s prices. Large corporations such as Walgreens or Nestlé that have significant facilities in cities such as Flagstaff offer insur­ance plans to their employees that maximize coverage or the quality of care while minimizing the cost of medical care to both the employer and employee. Cost of care can be determined objectively. Employees or corporations can look at the list of prices for various medical proce­dures offered by an insurance carrier for in-network medical providers and determine if it suits their needs.

Quality of care on the other hand is far more subjec­tive and may be more detrimental to a practice’s revenue potential. Insurance carriers take in-network providers and create a tier system. Tiering providers is based on the evaluation of both the cost and quality of a practice’s medical care.


Quality of care can be determined by member experience, how well providers manage member healthcare, and how well the plan is run. If you ever received a bad Yelp review it is understood that depend­ing on the complaint and resolution, the review can either be dismissed by potential patients or can deter a patient(s) from seeking care at a practice. While medical providers that enter an insurance carrier’s network have access to a larger patient pool, the practices are never completely shielded from the effects of negative reviews because the reviews may determine a practice’s standing within a carrier’s tier system. Isolated, sporadic patient complaints are inevitable for a medical practice, but accruing enough complaints that an insurance carrier drops a practice into a “less preferred” status directly impacts future earning potential of the practice and may limit the carrier’s recommendation of services patients should receive from a practice. Once a carrier labels a practice with a less preferred status, it appears that there is not much a practice can do to recover from dropping in the tier system. Thus, avoiding patient dissatisfaction is indirectly incentivized among carriers.



Research was conducted by the American Medical Association on strategies to mitigate the challenges provid­ers face with private insurance. One recommendation for growing practices was building an administrative or business management staff, which enabled physicians to focus on clinical care. While a fee-for-service practice may receive higher procedure reimbursement rates, patients largely prefer providers that participate with commercial insurance carriers. According to the interviewed provid­ers, practices that provide high quality care are those that are the most accessible, seek innovation through advanced technology namely in electronic health records, patient portals, and payment systems and “go the extra mile” in actively communicating with a patient. While providers have limited leverage in determining fee schedules with participating insurance carriers, developing relationship-based care maximizes a practice’s revenue potential.

About the Author

Colar Kuhns, BS, is both an DMD and MPH Candidate at A.T. Still University. He began contributing articles to Arizona Physician in 2022.

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