Health systems, states seek to fix primary care funding shortages

Modern Healthcare – Tuesday, October 7, 2025
By Caroline Hudson

Primary care investments are lagging, leading health systems, medical schools and state officials to try and reverse the trend.

Health systems and their educational affiliates are employing different methods to beef up primary care resources, including free tuition and tailored programs. The cause is also gaining traction among states. Legislators and healthcare advocates are assessing statutory or regulatory solutions such as spending targets to push for more funding and get payers involved.

More than 1,000 U.S. counties are designated as primary care shortage areas, and less than 5% of health spending goes to primary care, according to a Health Care Cost Institute report released last month.

“No matter how you cut it, it’s too low,” said Dr. Yalda Jabbarpour, director of the American Academy of Family Physicians’ Robert Graham Center, a policy research organization.

Here’s a look at how providers, educators and state officials are ramping up efforts to redirect resources to primary care services — and whether the efforts will be enough.

The provider perspective and investments

Health systems and their academic affiliates are focused on the primary care talent pipeline.

Phoenix-based Banner Health, for example, is training 217 family medicine and internal medicine physicians at an annual cost of about $29.1 million, said President and CEO Amy Perry. She expects the number to exceed 300 physicians annually by 2027.

“Every year, we’re adding now,” Perry said. “It’s all about access.”

Earlier this year, Banner also acquired seven primary care clinics and two walk-in sites in Colorado from Village Medical, adding 46 providers and more than 150 support staff.

Edison, New Jersey-based Hackensack Meridian Health is working on a grassroots approach. The Hackensack Meridian School of Medicine launched its Primary Care Scholars program last year, starting with five students and growing to 10 this year.

Students who commit to family medicine, general internal medicine, general pediatrics or geriatrics at Hackensack Meridian are eligible for free tuition, a $7,500 relocation fee and $2,500 a month for living expenses while in school. Graduates don’t have to pay back tuition if they work at the health system for at least three years.

“We think after being a student with us for three years, a resident for three and then working for three, that they’re pretty likely to stay with us in primary care,” said Dr. Jeffrey Boscamp, president and dean of the Hackensack Meridian School of Medicine.

Boscamp said funding the program is cheaper for the system than buying existing practices with full patient panels. Plus, patient care benefits, capacity and workforce availability are funneled back into the system.

“We’ll live with that decrease in revenue,” Boscamp said.

The University of Washington School of Medicine is known for tailored programs to bring students into primary care, especially in rural underserved areas.

The school helps spearhead WWAMI, a multistate medical education partnership with universities in Wyoming, Alaska, Montana and Idaho. Programs include Rural Underserved Opportunities, a one-month clinical experience between the first and second years of medical school; and Targeted Rural Underserved Track, or T.R.U.S.T., in which students are matched to one community in their home state throughout medical school.

About 50% of WWAMI graduates become primary care physicians, said Dr. Suzanne Allen, vice dean for academic, rural and regional affairs at the UW School of Medicine.

“These programs are a huge point of pride,” Allen said. “I have never felt like it was a struggle to justify these programs.”

The state perspective and investments

More than 20 states are reporting or have committed to reporting primary care spending, according to advocacy group Primary Care Collaborative. Some have also implemented spending targets tied to how payers reimburse for primary care services, with varied results.

California’s Health Care Affordability Board, for example, approved a goal in 2024 for insurers to direct 15% of their spending to primary care in the next decade.

Connecticut Gov. Ned Lamont (D) signed an executive order in 2020, through which the state set a 10% primary care spending target for commercial health plans, Medicare and Medicaid by 2025. As of 2023, primary care spending accounted for only 4.5% of total medical expense, falling short of annual incremental targets.

Rhode Island, the first state to implement primary care spending targets for commercial health insurers in 2010 through the Office of the Health Insurance Commissioner, revised the initiative in 2025.

OHIC adjusted its spending requirement for insurers to reach 10% by 2028 and changed its methodology to factor in all providers, not just those in Rhode Island. Regulators also offered more specific guidance on the billing codes that count as primary care investments and factoring in non-claims-based payments.

“You wouldn’t achieve [results] absent this regulatory action,” said Rhode Island Health Insurance Commissioner Cory King. “There has to be a consistent expectation across all health plans.”

King estimated the state could increase primary care investments by $100 million in the next four to five years.

In Virginia, the Center for Health Innovation had planned to pitch a spending target to legislators in 2026, but is instead focusing on collecting more payment data and understanding how primary care investments are dispersed.

The center launched the Virginia Task Force on Primary Care in 2020, with $300,000 in seed funding from philanthropic company Arnold Ventures. Years later, the task force is supported annually through the state budget, said Beth Bortz, president and CEO of the Virginia Center for Health Innovation.

However, Virginia legislators are facing the strain of upcoming federal funding cuts.

“It was feeling like [this] was not the moment to advance setting a spend target,” Bortz said. “We’d really like to have the most accurate information as possible as the baseline.”

Bortz said primary care investment efforts are not slowing down, and she hopes to revisit the spending target in 2027.

Is it enough?

Despite buy-in from states and health systems, some healthcare leaders fear the current investment rate may not head off negative consequences such as workforce shortages or poor patient health outcomes.

The Health Care Cost Institute report released in September found primary care spending ratios have decreased in recent years.

Advocates say there is a mismatch between the perceived value of primary care and its actual value.

Primary care doctors are among the lowest paid in the medical field, and the jobs are often overlooked for their lack of specialization.

“[Investment] needs to happen faster and bigger,” the Robert Graham Center’s Jabbarpour said. “A fee-for-service payment model … is very transactional and favors procedural specialties. The best things about primary care, the things that make patients healthiest, are not transactional.”

Access this article at its original source.