The fate of independent physician practices is uncertain as consolidation efforts by hospitals and health systems continue to dominate the market, according to a report released by the Progressive Policy Institute in December 2025.
The report evaluated 70 economic studies that analyzed the impacts of hospital acquisitions on physicians, patients and communities.
In one section of the report, researchers assert that “the independent physician is at risk of extinction,” as the percentage of independent physician practices owned by hospitals, health systems and corporate entities increased from 39% to 59% between 2019 and 2023. During the same period, the percentage of physicians employed by these entities increased from 62% to 78%.
The report acknowledges that physicians’ decisions to sell their practices to larger, corporate entities is often due to their desire for higher payments and financial security, access to costly resources or to free up their time to focus on clinical care rather than administrative duties.
“Selling an independent physician practice to a hospital, however, is not without significant downsides, and the implications of the loss of the [independent physician practice] as a distinct health care delivery model are widely overlooked,” the researchers claim.
The report likens independent physicians to independent pharmacies or grocery stores, noting that they have strong incentives to compete on service, access and quality. While this competition is valued by consumers, hospital ownership comes with a “significant loss of bargaining power and stronger incentives to meet the financial objectives of the hospital or corporate principal to which owned physician practices report.”
The report also raises concerns as to whether or not vertical mergers can create incentives to raise rival organizations’ costs, tightening competition and increasing costs for patients. This often takes the form of restrictive policies on inpatient and outpatient referrals, or “steering” patients to the owning hospital and away from competitors. Studies evaluated in the report showed that physician practices owned by a hospital direct about 83% of admissions to an owning hospital.
Another study published by Avalere in September 2024 that examined the cost differentials associated with different types of physician practice affiliations and sites of care: those led by hospitals and health systems, payers and corporate entities and management services organizations, some of which were backed by private equity groups. The study found that when an independent group joined another management services organization, or other independent practices with a financial partner — but remained independent — costs per Medicare beneficiary went down $960 over 12 months.
Conversely, the study revealed that when that same independent group joined an insurance company-backed corporation, such as Optum, cost per Medicare beneficiary went up $1,100 in 12 months. When an independent group joined a hospital system, costs rose by $1,350.
