Medicare and the Mayo Clinic

President Obama last year praised the Mayo Clinic as a "classic example" of how a health-care provider can offer "better outcomes" at lower cost. Then what should Americans think about the famous Minnesota medical center's decision to take fewer Medicare patients?
Specifically, Mayo said last week it will no longer accept Medicare patients at one of its primary care clinics in Arizona. Mayo said the decision is part of a two-year pilot program to determine if it should also drop Medicare patients at other facilities in Arizona, Florida and Minnesota, which serve more than 500,000 seniors.
Mayo says it lost $840 million last year treating Medicare patients, the result of the program's low reimbursement rates. Its hospital and four clinics in Arizona—including the Glendale facility—lost $120 million. Providers like Mayo swallow some of these Medicare losses, while also shifting the cost by charging more to private patients and insurers.
Of course, only governments can lose that much money and pretend they don't have to change. "Mayo Clinic loses a substantial amount of money every year due to the reimbursement schedule under Medicare," the institution said. "Decades of underfunding and paying for volume rather than value in Medicare have led us to this decision."

Mayo is probably a leading indicator of where other hospitals and doctors are headed. Physicians on average earn 20% to 30% less from Medicare than they do from private patients, and many are dropping out of the program. While about 92% of family physicians participate in Medicare, only about 73% of those are now accepting new patients. In some specialties—neurology, oncology, gynecology—in places like Manhattan and Washington, patients can struggle to find any doctor who'll accept Medicare.