In recent years, physicians have largely shifted from private practice into employed settings such as hospitals, health systems and other corporate healthcare entities.
According to a report published in May in the Journal of the Society of Laparoscopic and Robotic Surgeons, the number of hospital-employed physicians rose by 33% between 2013 and 2022 from around 157,000 to more than 205,000. In contrast, private practices grew by 17%, indicating hospitals are hiring at roughly double the rate.
In an Oct. 21 blog post, the American Hospital Association highlighted several trends that reflect the interconnectivity between physician employment trends and ongoing consolidation in the private practice space.
Here are four takeaways from the post.
1. Acquisitions driven by a need for resources and financial support. Private practices in 2025 face a range of challenges to their survival and sustainability, ranging from rising administrative burdens to inflation and infrastructure demands.
“The reality is that managing a solo or small group physician practice in today’s healthcare environment is not particularly attractive for physicians and, in some case, is nearly impossible,” reads the AHA post.
2. Preserving access to physicians. By acquiring or partnering with private practices, the AHA argues that hospitals and health systems can help preserve patients’ access to physicians.
“Disturbingly, many communities are at risk of losing access to physician services if these practices do not survive, and the risk is particularly high for primary care and certain specialist services that generally operate closer to breakeven,” reads the post. Administrative burdens, higher input costs, changing patient preferences on access to care and changing physician preferences for work-life balance all contribute to the growing obstacles for private practice physicians.
According to a 2023 survey by the AHA cited in the blog post, 94% of physicians say that it has become more financially and administratively difficult to operate a solo practice.
3. Declining reimbursement adds more pressure. Adjusted for inflation, Medicare physician payment has dropped 29% from 2001 to 2024 according to the American Medical Association.
“In highly concentrated, increasingly vertically integrated markets — where large payers also own physician groups — small, unaffiliated practices face asymmetric bargaining power and credible out-of-network threats,” reads the blog.
4. Payer’s snapping up physician practices. A recent report by the Center for Health & Democracy found that UnitedHealthcare now directly employs or contracts 90,000 physicians, representing approximately 10% of the U.S. physician workforce. And, according to the AHA, commercial health insurers have acquired roughly 40% more physicians than hospitals over the last five years.
Additionally, the AHA claims that commercial health insurers tend to focus their acquisitions on more profitable provider specialties, and that there is growing evidence that some insurers “strategically structure provider acquisitions in ways that allow them to more adorably manage medical loss ratio requirements.”
