Nicholas Grosso, MD, has watched Medicare pay for orthopedic surgeons erode for most of his private practice career. Now, he said, independent practices are running out of ways to absorb it.
“It’s death by 1,000 slow cuts, and so the effects are cumulative,” said Dr. Grosso, president of Bethesda, Md.-based the Centers for Advanced Orthopaedics.
Dr. Grosso joined the private practice space in 2001. He told Becker’s that practices have spent years finding ways to stay ahead of falling reimbursement, but those options are nearly exhausted. The result, he said, could be fewer independent practices, fewer surgeons willing to join them and less access for Medicare patients.
The math behind the squeeze
From 2001 to 2025, the cost of running a practice rose 60%, while over the same period Medicare physician reimbursement fell 33%, while hospital reimbursement rose 60%, according to Dr. Grosso.
Unlike most businesses, orthopedic practices can’t simply raise prices to keep up. “We’re one of the only industries in the world where we can’t set our own prices,” Dr. Grosso said. “The government sets our prices, and then the commercial payers follow suit.”
Another potential cut on the way
The CMS proposed 2027 Physician Fee Schedule would lower the conversion factor by 1.68% for most clinicians, and it could cut physician pay for total hip and knee replacements by 20%. For surgeons already absorbing years of cuts, that could be the breaking point.
“If I’m a total hip or total knee surgeon in private practice, I can’t do that,” he said. “So I’m going to go join a hospital where I’m going to get a guaranteed salary, and they get paid two or three times what I get paid in the private practice by Medicare.”
He said the financial pressure, combined with prior authorizations, government reporting and other administrative work, is already driving some older surgeons to retire early and others to sell their practices to hospitals or private equity.
How the Centers for Advanced Orthopaedics is adapting
Dr. Grosso outlined several ways CAO and other independent practices are trying to stay afloat, along with the limits of each. Some are shifting their payer mix, with practices cutting back on Medicare patients and filling those slots with better-paying patients. “My practice used to see 30% Medicare. We’re going to drop it down to 15% Medicare and try to backfill with better payers,” he said. “I think some groups will just drop Medicare completely if they can.”
Because staff is the largest cost, practices are trimming headcount, even though it means longer waits on the phone and at check-in, Dr. Grosso said.
Many orthopedic groups rely on revenue from ancillary services such as MRI and CT scanners. Dr. Grosso said Maryland is the only state where practices can’t own advanced imaging, so CAO relies mainly on physical therapy, which has its own ceiling.
CAO is looking at agentic AI for its call centers, but Dr. Grosso said new tools carry their own costs and risks. “A lot of these companies that are coming out in the last couple years with AI, they may not be here in three or four years,” he said.
The organization is also working on a direct-to-employer program for self-insured employers’ musculoskeletal care and is piloting its first contract.
When the bill comes due
Dr. Grosso argued that pushing surgeons out of private practice will raise costs for the whole system. “Any care rendered in a hospital or an HOPD is two to three times more expensive than that care rendered in an ASC,” he said. “So why would you kill the very practice setting that is best suited to save money for the system?”
His answer: Regulators would rather deal with a few hundred health systems than thousands of private practices. “On one hand they’re pushing us all into the hospital systems; on the other hand they’re going to regret it when the bill comes due,” he said.
Patients will feel it too, he said. When a local practice closes, patients may face longer waits and trips downtown for care at large academic centers.
At the Becker’s 32nd Annual Meeting: The Business and Operations of ASCs, taking place October 29-31 in Chicago, ASC leaders, surgeons and healthcare executives will explore strategies to drive growth, enhance operational performance, navigate reimbursement challenges and prepare for the future of ambulatory surgery. Apply for complimentary registration now.
