The recent discussions in Washington, D.C., about healthcare subsidies — interspersed with commentary on how “bad” the current U.S. healthcare system is — stimulated a thought. It is one thing for authorities in the capital to try to find a fix for cost and a broken system. It is another for those of us in the actual delivery of healthcare to ask: what can we do to “fix” our part of it?

This article is not about the insurance subsidy debate. We will look at the big picture, but more importantly, we will look at what can be done at the most important level — the physician who makes the decision on the treatment plan for each patient. I’ll ask questions to stimulate thought and offer a practical way to act on those questions.

Big picture

The cost of healthcare in the United States is a present-day problem that is projected to get worse:

• CMS reports that national health spending reached $4.9 trillion in 2023, or $14,570 per person, representing 17.6% of GDP.¹ 
• U.S. health spending was expected to reach $5.6 trillion in 2025 and continue growing to reach 8.6% trillion by 2033, per CMS estimates.²
• CMS also projects health spending growth to outpace GDP over the next decade, pushing the health share of GDP from 17.3% in 2022 to 19.7% by 2032.³

What is driving this? There are many contributors: high prices, expensive prescription drugs, chronic illness and co-morbidities, behavioral health and substance use, advanced technology, a fragmented delivery system, higher utilization, an aging population, and broader demographic changes. CMS specifically notes that faster growth in 2023 was driven by non-price factors, including use and intensity of services, along with more hospital discharges and higher Medicare outpatient hospital utilization.⁴

Hospitals consume about one-third of total national health expenditures (NHE), with physician and clinical services around one-fifth. Table 1 uses CMS NHE Accounts.

Government and private payers are both heavily involved. Table 2 summarizes the major payers.

Also shaping this picture: 90% of the nation’s $4.9 trillion in annual healthcare expenditures are for people with chronic and mental health conditions.⁷

What about demographics?

The United States is aging: By 2030, all Baby Boomers will be age 65 or older, which shifts the country toward higher medical need.⁸ The Census also reports that from 2023 to 2024, the population age 65 and older grew to 61.2 million, while the population under 18 declined, another signal of where demand is headed.⁹

At the same time, life expectancy is improving compared to the worst of the pandemic years, but we still lag peer nations. The CDC reports life expectancy at birth was 78.4 years in 2023 (75.8 for men and 81.1 for women),¹⁰ yet the U.S. remains below comparable wealthy countries. One benchmark puts the “comparable country” average at 82.5 years in 2023.¹¹ OECD data similarly shows an average of about 81.1 years across OECD countries in 2023, with the U.S. in the lower group.¹² These demographics will continue to exacerbate the cost picture, and chronic disease will continue to sit right in the middle of it.

If the system is broken, can it be fixed?

In spite of battles at the federal level, there are many efforts that have been tried or proposed to “fix” the system: Medicare and Medicaid, the Affordable Care Act, Medicare Advantage (Part C), Part D for prescription drugs, drug price policies, efforts to address prior authorization, value-based care initiatives, and the evolution of the accountable care organization (ACO), among others.

Some of these programs showed real movement. For example:

• CMS reported that Medicare Shared Savings Program ACOs generated $2.5 billion in savings related to various benchmarks and $245 per capita.¹³ (Whether this program is adequate is a different conversation.)
• The ACA drove down the number of uninsured Americans,¹⁴ but its future is uncertain while the overall cost of care continues to increase.

Even if Washington gets everything “right,” costs will still be driven by the decisions and workflows that happen in the exam room, in the phone queue, and in the referral path. The system needs repair.

Your picture

You are stressed, burned out, and overworked — time to retire! And besides, when you look at your practice, it can feel like you are a rounding error in a multi-trillion-dollar system. So why bother?

Oh wait — there are things that can be done to control cost of care at the physician level, not by rationing, but by practicing in a way that reduces avoidable utilization and makes wise choices about where care is delivered. Each individual patient care decision contributes to overall cost. 

Consider a few “small” examples: a preventable admission that turns into an ICU stay; repeated imaging because results didn’t follow the patient; site of service choices that quietly add facility fees; a discharge plan with no follow-up that becomes a readmission.

And site of service is not a minor detail. In employer-sponsored insurance claims, the Health Care Cost Institute looked at 57 services that can often be delivered in either a hospital outpatient department or a physician office. For all 57, hospital outpatient prices were higher.¹⁵ 

For something as basic as Level 1 imaging, the average 2022 price was $227 in hospital outpatient versus $61 in physician offices — about 3.7 times higher.¹⁶ Medicare policy discussions reflect the same dynamic: payment rates in hospital outpatient departments are typically higher than for similar services in physician offices, and billing has shifted toward higher-cost settings.¹⁷

So the practical questions are: 

• Are physicians and practices doing their small part to control avoidable cost while still delivering excellent care?
• Do you know the overall cost for patients’ major diagnoses (e.g., diabetes) and how many patients you treat annually for each diagnosis?
• Are care decisions based on the best evidence? 
• Do you treat your patients as individuals, N of 1?
• Do you have practice-based metrics that show the impact of those decisions?
• Are you part of a system that reduces fragmentation, or do you function in siloes? 
• Are you participating in value-based care programs such as Kidney Care Choices (KCC), the Oncology Care Model (OCM), or Comprehensive Care for Joint Replacement (CJR)?

Your plan

Let’s review the above scenarios and develop a plan for the long term: What is your strategy? Will you remain independent? Will you continue in an employment model? Will you leave the employment model and become or return to independent status? These are big questions, but they are not the only questions, and they are not the questions that determine day-to-day cost of care.

The cost of care is often decided in small moments: the test that is ordered “just to be safe,” the referral that defaults to the hospital system, the imaging location selected without thinking through site-of-service differences, the discharge that does not get a timely follow-up, the chronic patient who falls through the cracks and ends up in the ED. If physician decisions drive utilization and location of care, then the practice must support those decisions with information, workflow, and follow-through.

Develop a strategic plan but make it a practical one. What is your current patient mix based on diagnosis, payment type, and referral source? What is your payer mix? Are you serving the community you are involved in, or have you drifted away from it? What does your service area look like by age, economic factors, ethnicity, and other characteristics — and how does that compare with your current patient data? Whether you use internal analytics, public datasets, or reputable AI tools to summarize what is publicly known about your service area, the goal is the same: align your plan to the reality of who you serve and who is coming.

Then get specific. What is the mix of fee-for-service versus value-based care contracts and payments? What is your staffing ratio in terms of numbers and necessary skills? What diagnostics are internal and what is available in the community? What do you do to manage acute patient issues today — and what happens after the visit? Do you effectively manage patients after discharge? What are your top three to five chronic patient types, and are you using staff, telehealth, and remote patient monitoring resources appropriately to achieve optimal outcomes? Are there adequate location-of-service options, or do you need to develop them or build stronger partnerships? What is your digital footprint — and are you integrating information sources well enough to avoid rework and missed steps?

All these questions (and more) need to be addressed. Have a planning retreat with all physician owners present. Create a team to develop a draft plan and share it with others. Listen to the organization, listen to the staff doing the work, and then formalize a document and communicate it to everyone. Many of the comments in the following sections relate specifically to ideas and concepts that belong in the strategic plan — not as theory, but to support better clinical decisions and better cost outcomes.

Define, implement, and live your culture

Peter Drucker, a 20th century management thinker, is credited with saying “culture eats strategy for breakfast.” Identifying and living your values, norms, and behaviors makes up your culture. Strategy is a plan; culture is reality. Culture dictates employee attitudes which lead to behaviors. Culture comes from practice leadership — communication, actions, involvement, and follow-through in decision-making.

Why does culture matter to cost? Because cost control in healthcare is not “cutting.” It is consistency. It is doing the right things reliably, reducing avoidable utilization, and making wise choices about where care happens. And that can’t be implemented as a memo. It has to be lived.

Culture also indicates how easy or difficult it will be to integrate AI and other changes that evolve from the strategic plan. Do you live in silos, or is there integration across the patient cycle and the billing cycle? Do you have artifacts that are pervasive throughout the practice — simple routines, common language, visible priorities — that make it clear how decisions are made? Do you monitor and follow your strategic plan, or does it sit on a shelf?

What does your mission and/or vision statement really say — and do you live it? Do your values follow the mission? Values can include integrity, teamwork, respect, continuous learning, curiosity, communication, patient commitment, and others that fit your practice. By saying, writing, and living these, you develop culture. Include these “words” in everyday activities and you build a comprehensive, passionate care delivery system. Another key word is trust, which is slowly gained and quickly lost.

You can check culture by doing employee surveys. Another excellent way is to do a GEMBA: walk around the office and interact by asking questions, listening, and observing. Being seen is a real plus. And if you want a practical culture test related to cost: do people feel safe raising workflow problems that drive avoidable utilization, or do they keep quiet until the problem becomes an ED visit or a denial?

Care management

How do you deal with acute care, chronic care, or preventive care situations? Do you have a plan? Is there consistency in how you respond? Do you have the metrics to know how many hospitalizations occur per year — per patient or per 100 or 1,000 patients? Are any of those preventable by more effectively managing chronic illness or by focusing on prevention? Do you have an adequate post-discharge follow-up program? How many of your patients have more than one diagnosis and thus fit into the chronic care category? 

Knowing the prevalence of chronic disease and how much total healthcare spending is related to it, managing chronic illness and transitions of care is one of the strongest levers practices have to reduce avoidable utilization.

Is it realistic that the physician is the only one who can manage the patient? Or would it be better to have a collaborative approach with the assistance of a team — from the medical assistant to licensed nurses to other clinicians? Those resources may be internal, or they may exist through a referral network. With the complexity of chronic disease and the goal of stabilization, a consistent approach involving others is often essential to achieve quality goals and, where applicable, patient-reported outcome measures (PROM).

Creating and sharing educational material, recommending patient-friendly apps, listening, utilizing remote options when appropriate, and helping patients understand that they play a key role in their care plan can prevent avoidable deterioration. Establishing and utilizing available resources — or finding those resources — drives desired outcomes.

This is where a practice can start small and still be effective. Track ED visits and admissions that involve your patients. Track readmissions when you can. Track whether a follow-up visit happens after discharge within a defined window. Track whether medication reconciliation happens. You do not need perfection; you need visibility and follow-through.

Staffing

Beyond the number of employees necessary is the question of skill set, license, and the ability to work as part of a team. This includes the call center, front desk, clinical staff, technicians, revenue cycle staff, and leadership.

As AI evolves and more agentic AI resources become available, there will be disruption. Keeping in mind the culture discussion earlier, full integration and effective management of these changes — consistent with mission and values — will lead to success. There will be a need to upskill and re-skill each employee regardless of position. And it is important to remember that employees have brains! One of the biggest wastes in any practice is not allowing those brains to function — especially when the practice does not foster “what can we do to improve?” as a daily habit.

Engaging employees by listening, asking questions, and giving them freedom to test new ideas will lead to improvements in both clinical and administrative areas. Try the SPOT ON approach. Develop the Strategy, Plan, Organize, and Train to improve the skills available to provide the care necessary for each individual patient. This must be ongoing as AI continues to evolve.

And keep the cost focus grounded: if you want fewer ED visits, someone must do the work that prevents them. If you want better post-discharge outcomes, someone must ensure follow-up happens. If you want wiser site-of-service choices, someone must manage referral workflows and options. Staffing is not a separate topic from cost. Staffing is the mechanism by which better clinical decisions can be carried out.

System think

As mentioned above, collaboration is key. Do you work in silos where the front desk does its thing without regard to clinical needs — or without regard to the administrative needs of the revenue cycle? Or is there an efficient flow of information and patient movement to remove barriers and eliminate rework?

Have you created a process map that shows the flow and helps identify barriers or roadblocks to a successful outcome — both from a clinical and an administrative perspective? One of the key values you could add to the mission and values discussion is encouraging the idea of removing silos, creating smooth flow, and system thinking.

To control costs, meet quality objectives, and survive in today’s turbulent healthcare market, thinking out of the box and engaging everyone in finding the “best way” to do things is essential. This cannot be done in silos. It is essential to look through the entire process.

There are two critical pathways with each patient encounter. First and foremost is meeting the medical needs of the individual patient. Secondly is meeting the needs of the business. These parallel paths cross each other in several steps along the way and must be coordinated. At the same time, they have their own life and must be managed effectively and efficiently. This is why processing mapping matters. This is why system thinking matters: it keeps the practice from losing time, losing money, and losing patients to avoidable complications because the handoffs failed.

Technology

AI is here — live with it! Ambient listening, improved scheduling models, integrating information across the system, streamlining prior authorizations, reducing denials, a user-friendly patient portal, accessing information on unique disease states, utilizing precision medicine, and more will become realities in patient visits and in practice operations. The key is to gain an understanding of AI, large language models (LLMs), and the practical application of those tools to the patient population served by your practice. Integrating this into your existing IT structure will be critical. Do you have the necessary resources and funding to make this successful?

It is also necessary to keep an eye on current government-based incentive programs. The ACO model continues to evolve as do alternative payment models. CMS has recently introduced ACCESS (Advancing Chronic Care with Effective, Scalable Solutions) which emphasizes technology-supported approaches to care for certain chronic conditions.¹⁸ Along the same line, FDA has introduced TEMPO (Technology Enabled Meaningful Patient Outcomes). The key point is to be aware of the advancing emphasis on technology in providing care — especially for chronically ill patients.¹⁹

Beyond AI are additional technologies in diagnostics, personalized medicine, telemedicine, remote patient monitoring, 3D printing, and robotics. This is an exciting time to gain an understanding of these areas and their application to your practice. Think about the growth in chronic care demands and how these technologies apply to the various patient sets you serve daily. The disruption to your practice and the opportunity to innovate offer a real challenge to your team.

Community served

What are your current demographics beyond disease states? What ages, economics, and ethnicities make up your practice population? The total person needs to be considered when developing a care plan. It is one thing to know your current population and another to know your community.

Use reputable sources (and, if helpful, AI tools grounded in those sources) to review demographics by zip code in your service area. Match the internal picture (your patient panel) with the external picture (your community) and develop a plan to better serve that community. Do you have the staff and resources necessary to meet future demands?

Think about aging, cardiovascular, orthopedic, women’s health, behavioral health, children’s health demands — and fill in the blanks for your practice. Will you benefit from expanded service hours? Better access pathways? Expanded ambulatory options versus inpatient default? Expansion of the referral network? Offering more services internally to meet those needs?

Effective care management and more active use of technology can improve access. Even if you have increased volume and limited time, by becoming more efficient you can improve access and, at the same time, move toward an improved work-life balance.

Financial

What is your current mix of fee-for-service versus value-based care revenues? Do you have both upside and downside risk options? Managed care contracts are critical, and managing these effectively is essential.

Beyond revenue is cost. How much does it cost to manage a routine patient visit, do an ECG, other diagnostics, do a major surgical procedure (in terms of time spent traveling and doing), maintain satellite offices, and any of the many other services you provide? A simple starting point is dividing total costs by the number of visits. Not a true cost, but it is a start. Does your accounting software allow you to develop a true understanding of specific costs by visit, department, physician, or location? Possibly a new cost! And it need not be said — staffing, supply, occupancy, regulatory, and other costs are increasing. Effective management of the overall cost picture is essential.

Understanding your sources of payment along with the cost of providing services allows stronger decision-making. Should you continue with Contract A and discard Contract B? Can you manage both upside and downside risk contracts through ACO membership? Do you have funding to implement more AI options? Do you need a line of credit, and do you have the financial picture in place to obtain one?

And here is where cost-of-care returns to physician decisions. Understanding the cost of not only what services are delivered, but where those services are provided — and seeing the big picture for each care plan — goes a long way in dealing with increasing healthcare costs. Using evidence to guide individualized care plans is not just “best practice”; it is often the most efficient cost outcome because it reduces unnecessary utilization and avoids preventable complications.

Closing thoughts

Like it or not, the government plays a role in controlling overall costs, incentivizing approaches to care, and dealing with big-picture issues that are above our pay grade. Maintain awareness of what is happening at the federal, state, and local levels.

There is so much more that can be said about each of these sections. The real message is that even though a $1M revenue-generating physician may have a minor impact on the overall cost of healthcare, it is a place to start. The physician is a cost driver for every patient visit and outcome because physician decisions drive utilization, site of service, and follow-up intensity. The key is to continue to focus on the now and then move to the future through continuous process improvement. 

Do not rest on your laurels. Using a multidisciplinary approach and optimizing information and resources available will help the physician achieve desired outcomes — while also moving cost in the right direction. 

Notes:

1. CMS. “NHE Fact Sheet.” Available from: https://go.cms.gov/3N1PZDS
2. McGough M, Telesford I, Winger A, Cotter L, Cox C. “How much is health spending expected to grow?” Peterson-KFF Health System Tracker. Aug. 4, 2025. Available from: https://bit.ly/49hjmJB
3. Office of the Actuary. “CMS Releases 2023-2032 National Health Expenditure Projections.” CMS. June 12, 2024. Available from: https://go.cms.gov/494BVC4
4. CMS. “National Health Expenditures 2023 Highlights.” Available from: https://go.cms.gov/4pWx8bI
5. CMS. “NHE Fact Sheet.”
6. Ibid.
7. CDC. “Fast Facts: Health and Economic Costs of Chronic Conditions.” Aug. 8, 2025. Available from: https://bit.ly/4pX7Iuw
8. America Counts Staff. “2020 Census Will Help Policymakers Prepare for the Incoming Wave of Aging Boomers.” U.S. Census Bureau. Dec. 10, 2019, Available from: https://bit.ly/4aHAb2K
9. U.S. Census Bureau. “Older Population and Aging.” Available from: https://bit.ly/4aH10Em
10. Murphy SL, Kochanek KD, Xu JQ, Arias E. Mortality in the United States, 2023. NCHS Data Brief, no 521. Hyattsville, MD: National Center for Health Statistics. 2024. DOI: https://dx.doi.org/10.15620/cdc/170564
11. Rakshit S, McGough M. “How does U.S. life expectancy compare to other countries?” Peterson-KFF Health System Tracker. Jan. 31, 2025. Available from: https://bit.ly/4ppyJpw
12. OECD (2025), Health at a Glance 2025: OECD Indicators, OECD Publishing, Paris, https://doi.org/10.1787/8f9e3f98-en
13. CMS. “Medicare Shared Savings Program Accountable Care Organizations Updated Performance Year 2024 Financial and Quality Results.” Sept. 29, 2025. Available from: https://go.cms.gov/45sXZnx
14. Hest R. “15 Years of the Affordable Care Act: More Americans Than Ever Have Health Insurance Coverage.” SHADAC. March 24, 2025. Available from: https://bit.ly/45Bp5sC
15. Chang J, Sarfo L. “Prices in Hospital Outpatient Departments are Consistently Higher than Physician Offices among Site-Neutral Services.” Health Care Cost Institute. Aug. 13, 2025. Available from: https://bit.ly/45sY8HB
16. Ibid.
17. Cubanksi J, et al. “Medicare 101.” KFF. Oct. 8, 2025. Available from: https://bit.ly/3ZqBpsi
18. CMS. “ACCESS (Advancing Chronic Care with Effective, Scalable Solutions) Model.” Available from: https://go.cms.gov/4pZr1Tc
19. U.S. FDA. “FDA Launches TEMPO: A First-of-Its-Kind Digital Health Pilot to Expand Access to Chronic Disease Technologies.” Dec. 5, 2025. Available from: https://bit.ly/4rb6a0j