Published August 1, 2026

Most businesses can raise prices when their costs go up.

Physician practices usually can't.

CMS sets what Medicare pays for physician services, and those rates often influence what private insurers are willing to pay as well. At the same time, salaries, benefits, rent, technology, insurance, supplies, and other costs of running a medical practice keep going up.

That's the challenge.

If you can't raise prices to protect your margins, you have to get better at managing the things you can control.

The Numbers Show the Problem

The gap between reimbursement and rising costs isn't new.

According to the American Medical Association, Medicare physician payment increased about 10% from 2001 through 2026. During that same period, the cost of running a medical practice increased about 63%.

There is some good news in 2026. CMS increased the Medicare Physician Fee Schedule conversion factor. However, part of that increase comes from a temporary 2.5% adjustment that applies only to 2026. Under the proposed 2027 Physician Fee Schedule, that temporary increase goes away, and the conversion factors would decline from 2026 levels.

For physician owners, that's another reminder that you can't count on higher reimbursement to protect your profits.

Manage What You Can Control

There isn't one magic solution for improving margins.

Instead, there are a lot of smaller things happening throughout your practice that ultimately determine how profitable it will be.

Are there unused appointments on your providers' schedules?
How much revenue are you losing from cancellations and no-shows?
Are physicians doing work that could appropriately be handled by an advanced practice provider (APP)?
Are claims being billed quickly after the patient is seen?
Are denials, underpayments, or other billing problems keeping you from collecting what you've earned?
Has staffing grown faster than patient volume?
Which providers and services generate your strongest margins?

None of these issues alone may look like a major problem. Together, they can make a significant difference.

The goal isn't simply to cut expenses. It's to understand where you're making money, where you're losing it, and where you have opportunities to improve.

More Patients Don't Always Mean More Profit

When margins get tight, the first reaction is often:

“We need to see more patients.”

Maybe.

More patients mean more revenue. But they can also mean more staff, more supplies, more space, and eventually another provider.

If it costs you almost as much to handle the additional volume as the revenue it generates, you haven't solved your margin problem.

The better question isn't:

“How can we generate more revenue?”

It's:

“How can we generate more profitable revenue?”

Sometimes that means seeing more patients. Other times it means making better use of the providers, staff, and capacity you already have.

Look for Places Where You Have More Control Over Price

Another opportunity may be services where your practice has more control over what it charges.

Depending on your specialty, that might include cash-pay services.

Cash-pay services aren't right for every practice. But when they make sense clinically and there is patient demand, they can give you something traditional insurance often doesn't: more control over price.

Before adding a service, you still need to understand the demand, provider time required, additional staffing or equipment, and how much profit the service should actually produce.

Just because a service generates more revenue doesn't mean it's a good investment.

The goal is profitable growth, not simply more revenue.

Where a Fractional CFO Can Help

Your accounting team can tell you what happened financially last month.

A Fractional CFO should help you understand why it happened and what you should do next.

Why did payroll grow faster than revenue? Would another APP improve profitability? Can you afford another physician? Would adding a cash-pay service make financial sense?

A Fractional CFO helps you put numbers behind these decisions before you make them and connects what's happening in your financial statements to what's happening every day inside your practice.

The goal isn't simply to cut costs. It's to understand where your time, money, and attention can make the biggest financial difference.

Strong Margins Help Protect Your Independence

Healthy margins aren't just about making more money. They give physician owners choices.

Strong financial performance allows you to invest in employees, technology, and patient care. It gives you the ability to recruit physicians and APPs, add services, expand your practice, and better handle future reimbursement changes.

Most importantly, financial strength can help you maintain control of the practice you've worked hard to build.

You may not control what CMS pays for many of the services you provide.

But you have much more control over what happens around that reimbursement.

When you can't control price, managing everything else becomes even more important.

Concerned about your practice's margins?

How Can I Help?

Let's talk. Schedule a 30-minute conversation.

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