As healthcare consolidation accelerates, many small and midsized physician practices are struggling to remain independent amid mounting financial and regulatory pressures.
In response, Pelto Health Partners was launched three years ago as a collaborative effort between three physician-owned orthopedic groups — EmergeOrtho, OrthoIndy, and Proliance Surgeons — to preserve private practice autonomy and support long-term sustainability.
Frank Aluisio, MD, of EmergeOrtho and chair of Pelto’s board, joined Becker’s to discuss the urgent challenges facing independent physicians and how Pelto is working to safeguard the physician-patient relationship in an evolving healthcare landscape.
Questions: What are the biggest challenges facing independent physicians right now, and how Pelto is working to address them?
Dr. Frank Aluisio: The biggest challenges are financial and regulatory. Reimbursement is decreasing — CMS has reduced it annually, and while there’s a small bump coming next year, it’s explicitly for one year. Commercial payers tend to follow Medicare, so fee-for-service reimbursement is hurting us.
On the regulatory side, it’s gotten more difficult. To meet requirements — EHR, HIPA and other mandates — we’ve had to increase staff, which raises costs. Inflation alone has increased the cost of business. From 2000 to 2024, cumulative inflation is 60%, and we’ve seen no reimbursement increase from the government during that time.
It’s also harder to recruit and retain staff, especially in competitive markets where hospitals can offer better salaries and benefits.
Question: Can you speak a bit about the importance of independent practices, for both physicians and patients, in contrast to consolidation and employed models?
Dr. Aluisio: For patients, it’s extremely important. We can maintain the physician-patient relationship. In private equity and hospital models, it’s about pushing volume or, in the case of private equity, preparing for a second sale. The patient gets lost in that — it becomes profit over the patient.
We prioritize patients over profits. The hospital model is also focused on filling beds. In both cases, the cost to patients and the system increases. Private equity has been shown to drive up costs in high-density areas, and hospital-employed settings charge 30-40% more for the same procedures or imaging compared to independent practices.
Q: What about the benefits for physicians?
Dr. Aluisio: Autonomy is key. In independent practice, you set your own schedule, see as many or as few patients as you want, and structure your work life as you see fit. You’re not pushed to meet quotas. One of the biggest contributors to burnout is loss of autonomy, which is why burnout rates are so high now.
Also, if a physician has entrepreneurial aspirations, they have opportunities in ancillaries and other ventures in independent practice—opportunities that don’t exist in employed or private equity models.
