Independent physician practices are rapidly disappearing as hospitals, insurers, corporate entities and private equity firms expand their reach. However, new models of practice ownership and physician leadership are helping independent physicians adapt to healthcare’s challenges.
Years of private practice decline
In 2024, 42.2% of physicians were working in private practice, a significant drop from 60.1% in 2012, according to the American Medical Association’s “Physician Practice Benchmark Report,” published May 29. Private practice now represents less than half of physicians in most medical specialties, with participation ranging from 30.7% in cardiology to 46.9% in radiology.
Conversely, the share of physicians working in hospital-owned practices rose to 34.5% in 2024 — an 11-percentage point increase from 23.4% in 2012.
According to the AMA, the top reasons that physicians decided to sell their practices included a lack of negotiation power over payer contracts, the cost of necessary resources and managing administrative requirements.
“I’m concerned about the model and the fact that the playing field is tilted towards physicians becoming employees, rather than being able to stay competitive and independent,” Paul Berggreen, MD, immediate past president of the American Independent Medical Practice Association, told Becker’s.
For many independent physicians, reimbursement cuts remain the most immediate threat to survival. On Oct. 31, CMS issued its final policy changes for Medicare payments under the Physician Fee Schedule — including a 3.77% increase from the current conversion factor.
Despite the increase, physicians told Becker’s that the update is not significant enough to make up for more than 20 years of reimbursement declines and the rising cost of operations. Years of declining reimbursement have created an imbalance in the financial risk calculation for many physicians debating a transition into private practice.
“Twenty-five years ago, I thought the risk was terrifying,” Dr. Berggreen said regarding the financial reality of going into private practice. “But now the risk is almost unacceptable.”
Growing corporate presence
Corporate entities, like insurers and private equity firms, have steadily increased their presence in medicine, contributing to the decline in private practice.
All 10 of the largest U.S. insurers have bought practices or management service organizations. UnitedHealth Group’s Optum reportedly employs 9,000 physicians and affiliates with around 90,000 and holds about 2.7% of the national primary-care market in 2023, according to a recent Government Accountability Office report.
Additionally, about 6.5% of physicians worked in PE-owned practices in 2024 (4.5% in 2022). In some specialties (including gastroenterology, dermatology and ophthalmology), PE involvement exceeds 30%. Several states, including Oregon, California and Pennsylvania, have all recently passed legislation to increase scrutiny over PE deals in healthcare.
Mergers and acquisitions have always been part of our industry, but the current pace is staggering. I don’t view it as inherently good or bad — it’s just the way things are evolving,” Simon Schwartz, associate director of the Colorado Ambulatory Center Association and chief operations officer of Englewood-based Strategic Resources Group Colorado, told Becker’s. “Physician practices are entering agreements with large healthcare providers, sometimes with different expectations than the reality they encounter.”
More than 40% of independent medical practices closed or were acquired by hospitals, health systems and other corporate entities, including payer-affiliated healthcare groups and private equity, according to a study published by Avalere and the Physicians Advocacy Institute.
What will happen next?
Current trends towards consolidation and employment are likely to persist, as nearly 47% of physician practice owners are over age 55 and actively exploring retirement options.
There are also a number of consolidation models that avoid traditional acquisition practices that have become controversial in healthcare. For example, Charleston, S.C.-based Articularis Healthcare Group has built a model aimed at preserving the independence of community rheumatologists while providing the scale, infrastructure and resources needed to thrive in today’s complex healthcare environment. Becker’s has reported on at least 13 new platforms and MSOs in 2025 built around physician-ownership and autonomy.
Healthcare technology start-up Meroka, which helps independent physician teams through a platform that supports practice operations, recently launched with $6 million in seed funding.
“Independent doctors are some of the most entrepreneurial and mission-driven professionals out there,” Alex Barrett, CEO of Meroka, said regarding the launch. “But too often, they are forced to spend more time managing vendors and paperwork than leading their teams and caring for patients. We built Meroka to give them the support and ownership structure they deserve, so they can keep building the kind of care they believe in and keep their practices in the hands of their teams and communities.”
Teresa Tam, MD, a minimally invasive gynecological surgeon and owner of All for Women Healthcare in Chicago, told Becker’s that minimizing the risk associated with private practice comes down to preparation, efficiency and relationships.
“The most common pitfalls? Underestimating startup costs and cash flow challenges. Insurance reimbursements take months, so you need adequate capital reserves. Don’t try to do everything yourself,” she said. “Invest in good billing services and practice management software from the start instead of trying to save money with makeshift systems. As for marketing, I’ve found that good surgical outcomes are the best marketing tool. Satisfied patients become your strongest advocates and referral sources. That said, you still need to build relationships with primary care physicians and establish an online presence early on. Lastly, invest in an experienced administrative support who really understands surgical scheduling, insurance credentialing and prior authorizations.”
