How Medicaid Cuts Plus the Lack of a Practice Staffing Plan Impacts Independent Practices

Experts warn that Medicaid cuts will significantly impact physician practice staffing models by reducing reimbursement, triggering hiring freezes and layoffs, and potentially leading to a greater reliance on lower-cost staff. These changes would especially affect independent, rural, and safety-net practices that serve a higher proportion of Medicaid patients.

Staffing adjustments due to Medicaid cuts

Hiring freezes and layoffs: Reduced revenue from lower Medicaid reimbursement rates would force practices to cut costs, primarily by halting new hires or laying off existing staff. According to a 2025 Milken Institute report, severe federal Medicaid and food assistance cuts could lead to the elimination of nearly half a million healthcare jobs.

Increased workload and burnout: Layoffs and freezes would place a heavier burden on remaining employees, including physicians, who would have to take on administrative tasks and other duties typically handled by support staff. This can increase burnout and turnover, creating further staffing instability.

Shifting responsibilities to non-physician providers: As cost pressures rise, practices may increasingly utilize lower-cost providers, such as nurse practitioners (NPs) and physician assistants (PAs), to take on more responsibilities.

Nurse practitioners: Practices in states with flexible NP practice laws may rely more on NPs for primary care to offset lost revenue, as they are often reimbursed at a lower rate than physicians. However, full reliance on this model may be limited by state-specific scope-of-practice laws.

Physician assistants: Similarly, practices may shift duties to PAs, though this model's feasibility depends on state Medicaid policies that regulate how PA services are billed and reimbursed.

Service reductions: Financial constraints from reimbursement cuts may compel practices to reduce services or operational hours, particularly in rural and underserved areas. Some practices may even be forced to close. This reduces patient volume and the associated staffing needs.

Disproportionate impact on vulnerable practices

Rural and underserved areas: Practices in these locations are particularly reliant on Medicaid and Medicare revenue and often operate on thin margins. For these practices, Medicaid cuts significantly endanger their viability and jeopardize the livelihoods of local healthcare workers.

Solo and independent practices: These practices are less able to absorb financial hits compared to large healthcare systems. Many are already struggling with rising operational costs and unstable payment rates.

Safety-net providers: Hospitals and clinics serving a higher proportion of low-income patients, like Sinai Chicago, would be hit hardest and may need to cut services or close departments to minimize losses.

Patient and physician consequences

Ultimately, these staffing model changes would reduce patient access to care, particularly for marginalized communities. Physicians and remaining staff would face greater pressure and burnout, while the most financially vulnerable practices would face closure or consolidation.

Compounding the problem is the fact that practices adding telehealth, ancillary services or extended hours without parallel staffing strategies risk provider burnout and service failures. Outsourcing or hiring early lets you scale without overloading today’s team.

Action: Attach a staffing impact statement to every new service proposal: forecast added patient volume, skills required and the break‑even point for each additional full‑time or contracted role.

And Speaking of H.R.1

CMA's Webinar, H.R. 1 – What Physicians Need to Know About Changes to Medicaid and the ACA will take place August 28, 2025, 12:15pm-1:15pm

You can REGISTER HERE, the cost: FREE for CMA/CMS members

Despite strong opposition from physicians and health advocates, Congress passed H.R. 1, the “One Big Beautiful Bill Act,” enacting deep cuts to Medicaid, rolling back Affordable Care Act coverage and threatening California’s health care safety net. Signed into law on July 4, 2025, the bill enacts more than $1 trillion in federal health care cuts and jeopardizes coverage for millions of Californians. In this webinar, CMA staff will provide an overview of the major changes in H.R. 1 and discuss the impact on physicians, practices, and patients.

Uncertain Times Leads to Outside Income and Complexity

As the medical profession continues to take unprecedented hits from federal cuts to reimbursement disparity, some physicians are open to outside revenue sources. One example is an anesthesiologist who owns a video laryngoscope that she purchased when working privately. When the physician switched to an employed position, the hospital approved the use of it in their cases. The device company then asked the physician to appear in a promotional video talking about experience with the laryngoscope.

The result was the hospital employer not supporting the scenario citing possible liability: “The hospital would therefore have to be assured by the laryngoscope company that any presentation of the physician affiliation to the hospital, whether during an introduction, in their own words, or any on-screen text or printed materials, would be subject to the hospital’s vetting and approval, or that there would simply be no presentation of your affiliation to the hospital whatsoever.”

To learn more about option click here:  https://www.physiciansweekly.com/post/qa-when-physician-employers-restrict-outside-income

#####