Wayne Winegarden Says Banning Corporate Medicine Ineffective

State bans on corporate ownership of medical groups are often promoted as a way to protect small doctors’ offices, but the data suggest the rule alone won’t keep a clinic independent.

Why the bans may miss the mark

Most state statutes that forbid corporate practice of medicine carve out an exception for hospitals. That means a hospital can still buy a solo practice while the same law blocks a private equity firm from doing so. The gap creates an uneven playing field, leaving doctors with fewer options to stay truly autonomous.

Wayne Winegarden, senior fellow at the Pacific Research Institute, points out that the real line between a partnership that preserves control and a full‑blown acquisition is who decides on coding, medical-record policies, and hiring. When an outside manager dictates those choices, the clinic’s independence erodes, even if the ownership structure technically complies with the ban.

Financial pressure fuels the shift

From 2000 to 2022, Medicare physician fees rose just 12 percent, while the cost of running a practice climbed almost 48 percent. That widening gap forces many doctors to look for outside help to stay afloat.

Winegarden notes that a practice weighing an offer from a health system or a management services organization runs the numbers against more than two decades of stagnant Medicare reimbursement. The math often shows that without additional revenue streams, a solo operation can’t survive the rising overhead.

He also argues that if Medicare payments had kept pace with inflation, the consolidation we see today would be far less common. The exact impact is hard to measure, but the trend points to policy, not corporate interest, as the primary driver.

Control versus acquisition

In an MSO partnership, the doctor-owner retains the final say on clinical decisions, even though the organization may handle billing, IT, and staffing. By contrast, an outright acquisition hands over those levers to the buyer.

Winegarden cites a Pennsylvania example where a “bean counter” in one state tried to set patient-care rules for a clinic in another, illustrating how far control can stretch beyond borders when ownership changes hands.

Early evidence from MSO deals shows better collection rates and steadier cash flow, while prices remain below those charged by hospitals. However, the long-term competitive effects are still unclear because the sample size is small.

What doctors should ask before signing

When a clinic is approached by an MSO or a health system, Winegarden advises physicians to probe four areas: quality of life, compensation structure, how much of their time will be spent on patient care versus administrative tasks, and the financial risk they will carry.

He stresses that there is no solid evidence that a fully independent model is less efficient at delivering care. The key is whether the arrangement preserves the ability to make clinical choices without undue external pressure.

In California, Senate Bill 351 offers a template that many consider more balanced than Oregon’s Senate Bill 951, which imposes stricter limits on staffing firms. Winegarden sees the California model as a better fit for clinics that want to keep decision-making authority while still gaining some economies of scale.

Looking ahead, the survival of solo and small-group offices will hinge more on how Medicare reimbursement is indexed and whether site-neutral payment policies are adopted. Winegarden calls for a permanent inflation index for physician fees and a payment structure that treats outpatient services equally, regardless of setting.

In the middle of these debates, a cautious view emerges: if the financial squeeze continues and regulatory demands grow, even practices that manage to retain control may find themselves forced to merge or close. The pressure is not just from private investors but from a reimbursement system that has not kept up with the rising costs of running a clinic.

Winegarden remains optimistic that independent offices can survive the decade, provided that policymakers address the payment gap and avoid extending corporate bans to hospitals, which would further limit competition.

Real independence depends on who holds the reins over daily operations, and on a payment system that reflects the true cost of providing outpatient care.