Policy Pathways to Support NP-Owned Primary Care Practices in Rural Areas

Primary care in rural America is stretched thin. Rural areas have just five primary care physicians (PCPs) per 10,000 residents, while urban areas have eight. This gap is especially concerning given that rural residents tend to have higher rates of chronic disease, fewer financial resources, and shorter life expectancies than their urban counterparts.  

One promising development is the burgeoning nurse practitioner (NP) workforce, which is growing at 11% a year (vs. 1% for physicians). This growth matters for rural areas as rural populations increasingly rely on NPs as their predominant source of primary care. This also fits a broader pattern showing that NPs are more likely than other clinicians to serve low-income communities and health professional shortage areas and they achieve strong outcomes for vulnerable patients.  

A small subset (3%) of the growing NP workforce owns and operates independent practices. Our analysis of 2024 Medicare claims identified 4,267 practices in which NPs were the only clinicians billing for care. As Figure 1 shows, these practices are unevenly distributed. They make up the largest share of practices in populous states such as California, Texas, Florida, and New York, and the smallest share in the largely rural Plains and Mountain West. This suggests NP-owned practices have yet to take hold in many of the rural areas that could benefit most from them. 

Figure 1. Relative Concentration of NP-Only Practices, by State, 2024 

Source: Authors’ analysis of 100% of 2024 traditional Medicare claims.

Notes: Practices were defined by Tax Identification Number (TIN). NP-only practices were those in which all billing clinicians were NPs (Medicare specialty code 50). We excluded practices with fewer than 10 attributed beneficiaries, more than 25% of billing for urgent care services, or more than 50% of billing in skilled nursing facility or hospital settings. Shading shows NP-only practices as a percentage of all practices billing Medicare in each state.

To better understand why NPs open their own practices and what facilitates or threatens their sustainability, we held focus groups with NP practice owners. In this post, we highlight the NP owners’ unique contributions and challenges in providing primary care in rural areas. Building on existing policy recommendations to maximize the overall capacity of the primary care NP workforce, we offer state policy recommendations to support rural NP-owned practices, including leveraging funds from the Rural Health Transformation Program.  

Why Do NPs Open Their Own Practices? 

We spoke with 15 NPs who owned primary care practices from across the United States. Their motivation to open a practice was usually twofold. First, they wanted to provide holistic, patient-centered primary care, but found this difficult in their previous jobs which emphasized visit volume over patient relationships. Second, they saw the local health care system struggle to meet the needs of their patients, who often “bounced back” to the hospital soon after discharge because of a lack of available follow-up appointments. By opening their own practices, these NPs created new access points, where patients could receive the preventive and chronic disease care needed to keep them out of the hospital, and where the NPs could practice primary care the way they wanted.  

Many rural NP owners started small, offering house calls to a handful of patients or collaborating with assisted living facilities. Some have kept their practices as small side gigs, while others scaled quickly, which allowed them to leave their full-time positions, hire staff, and expand to new sites.  

What Are the Strengths and Challenges of Rural NP-Owned Practices? 

As residents of the communities they serve, rural NP owners often have established relationships with patients and see them in the context of their families and environments. Like other rural clinicians, they operate with more autonomy than their urban counterparts and often manage more of their patients’ care directly, because access to specialists and other providers is limited. Many of these practices are small, and some primarily conduct house calls and telehealth visits to keep their overhead low. These features and their knowledge of their communities’ evolving needs help them respond to emerging local challenges, such as clinic closures or natural disasters more quickly than larger health systems can. 

Still, NP owners face several financial barriers, some of which may be more pronounced in rural areas. The first is access to capital. NPs in our focus groups experienced challenges securing start-up and expansion loans. Because NP-owned practices are still relatively rare, lenders, particularly smaller rural banks, may have little experience with them. As a result, NP owners may have limited access to financing, which constrains their ability to grow. NP owners reported being approved for only a fraction of what they requested, and many relied on personal assets to start or expand their practices. 

Second, NPs receive lower reimbursement than physicians. Medicare pays NPs 85% of the physician rate for the same services, and many private payers follow suit. Medicaid rates vary; while many states have NP-physician pay parity, others (i.e., Kentucky and Kansas) pay NPs as little as 75% of the physician rate. Yet staff, rent, equipment, and utilities all cost the same whether the practice is owned by an NP or a physician. Rural residents are also more likely than urban residents to be covered by Medicaid, and NPs are more likely than physicians to care for Medicaid patients. As a result, rural NP owners likely care for a higher share of Medicaid-insured patients than other clinicians. In doing so, they absorb Medicaid’s lower rates more often than other clinicians do, and in some states, they take an additional cut on top of that. 

Lastly, supervision fees are an added expense for NP-owned practices. In about half of all states, NPs must maintain an agreement with a supervising physician to practice. For NP owners, this often means hiring a physician to meet that requirement, at a cost of up to $1,500 per agreement per month. Because each NP needs their own agreement, an NP owner in a restricted-practice state who employs two additional NPs could pay $4,500 a month for supervision. The clinical value of this supervision is unclear, especially in rural areas. Of the states that require supervision, only three states mandate on-site time, so supervision is largely remote. Supervision also makes practices fragile: an NP whose supervising physician retires or ends the agreement may have to stop seeing patients until a replacement is found.  

These barriers compound for rural NP owners, who are paid less than physicians for delivering the same care, likely serve more patients insured by the payer that reimburses the least, and pay additional fees for supervision, which is of questionable benefit. 

State Actions to Address NP Practice Barriers 

Emerging NP-owned primary care practices could help address rural health disparities, but the barriers above threaten their sustainability. Several targeted state policy actions could help:

1. Adopt Medicaid pay parity.  States without parity could pass legislation to increase the reimbursement rate for NPs to 100% of the physician fee schedule.  
2. Modernize scope of practice laws. In about half of states, NPs are limited by restrictive scope-of-practice laws. Granting full practice authority to NPs in all states would eliminate the unnecessary cost of physician supervision for NP-owned practices. 
3. Include NP-owned practices in Rural Health Transformation Program projects. As states design and implement their Rural Health Transformation Program workforce projects, they can direct funding toward strategies that strengthen rural NP-owned primary care practices. These initiatives could include incorporating NP-owned practices into Medicaid managed care networks; establishing state-funded start-up and expansion loans for rural NP owners; and investing in workforce development through state-funded fellowships that pair rural new NP owners with mentors experiences in operating a primary care practice, similar to Tennessee’s APRN Rural Health Entrepreneur Fellowships.  

NP-owned practices are filling gaps in rural primary care, despite significant financial hurdles. With Rural Health Transformation Program funds now flowing to states, policymakers have a timely opportunity to help these practices take root and grow where they are needed most.