The Busiest Practice Is Rarely the Most Profitable
More patients will not fix a margin problem. That sentence goes down badly with physician owners, because volume is the one number a practice is built to produce and the one every owner instinctively trusts. Book more, work later, add a Saturday, and the schedule fills. The deposits, somehow, do not move the way the effort did.
The reason is that volume and profit are set by two different machines. Volume you control with your hours. Profit is decided upstream, by the rate on each contract and the mix of payers behind the visits, and no amount of running the schedule harder changes either one.
The treadmill is tilting up
Start with the rate, because it has been moving against you for years. The Medicare conversion factor, the dollar figure that turns your work into a payment, has fallen 5 years running. The 2025 cut was about 2.83 percent, dropping the number from roughly 33.29 to 32.35. In the same year CMS put the increase in its own Medicare Economic Index, the government's measure of what it costs to run a practice, at about 3.5 percent. Read those two together. The price your largest payer pays went down while the cost of doing the work went up, by the government's own accounting.
That is a treadmill that tilts up a little more each year. Every incremental Medicare visit you add lands on that grade. You did the work and you carried the cost, and the margin on the marginal visit is thin to negative before you count the overhead of getting paid. Adding volume on a losing rate does not dig you out. It digs faster.
Mix is the number under the number
Now the second machine, the one owners track least and that decides the most. Which payer sits behind a visit changes what that identical visit is worth to you, and the spread is not small. A practice heavy on commercial contracts and one heavy on Medicare and Medicaid can run the same schedule and the same rooms with the same clinicians, and post entirely different bottom lines.
Buyers have already priced this, which is the tell. Advisors who value physician groups report that practices drawing more than 70 percent of revenue from commercial payers command something like 40 to 60 percent higher multiples than peers leaning on government programs. They are not paying for better medicine. They are paying for a mix that produces more margin per unit of the same work, and they will not pretend otherwise at the table.
You can move the mix, slowly. Which contracts you sign and renegotiate. Which referral sources you cultivate and which you let cool. Which service lines you grow and where you put the next location. None of it is fast. All of it moves the number that volume cannot touch, and a practice that pulls those levers deliberately over a few years looks financially different from one that let the door decide.
Keep score on the right line
Here is the practical failure. Most owners watch total charges and total visits, and both of those can rise in a year the practice got poorer. Charges are not collections. Visits are not margin. A dashboard built on the two numbers that feel like productivity will hide the one problem that is actually eating you.
Change what you look at. Pull revenue per visit by payer, not visits in total. Put your Medicare and Medicaid share next to your commercial share and watch the trend across a few years, not one quarter. Then ask the uncomfortable question about your fullest days, the ones that leave you drained. Are they full of the visits that fund the practice, or full of the visits that only keep it busy?
If you have never seen the schedule sorted that way, that first look usually reorders your priorities for you. The fix is not another Saturday. It is deciding, on purpose, whose patients fill the calendar you already have.