Numerous disruptors are currently shaping a new era of physician consolidation, as private practice continues to decline amid heightened corporatization in healthcare.
Here are three current disruptors in the physician consolidation space:
Consolidation by large, integrated health systems and hospitals
While consolidation by large hospitals and health systems is nothing new in healthcare, healthcare leaders frequently identify this trend as one of the most significant disruptors in healthcare.
“The most disruptive player in physician consolidation today is arguably the hospital employment model. While this model was initially seen as a solution to the challenges faced by physicians in private practice, it has proven to be short-sighted and detrimental to the overall synergy and effectiveness of healthcare delivery,” Daniel Decker, MD, a urologist in Mountain House, Ark., told Becker’s.
Hospital consolidation of physician practices has also been associated with increased costs, according to a recent study published by the National Bureau of Economic Research. The study found that the share of private physician practices acquired by hospitals rose by 71.5% between 2008 and 2016. By 2016, nearly half of all physician practices were hospital owned. Two years post-merger, prices increased 15.1% for physician services, with no measurable improvement in quality.
The study also found that hospitals are hiring faster than practices are growing. Between 2013 and 2022, the number of hospital-employed physicians increased by 33%, from around 157,000 to more than 205,000. In comparison, private practices grew by just 17%, according to a May report in the Journal of the Society of Laparoscopic and Robotic Surgeons.
“Hospital employment models may seem like a viable solution for physician consolidation, but they are ultimately disruptive and counterproductive,” Dr. Decker said.
A surge in payer-owned physician practices
The percentage of payer-operated physician practices has grown significantly since 2016, according to a newly published study in Health Affairs Scholar.
Payer-operated practices accounted for 4.2% of Medicare primary care services in 2023, up from 0.78% in 2016. Optum, the physician practice branch of UnitedHealth Group, controlled 2.71% of the national market by service volume, making it the dominant payer-affiliated provider in primary care.
UnitedHealth has a significant presence in the physician workforce overall. As of July 17, UnitedHealth directly employed or contracted more than 90,000 physicians, according to a newly published “Sunlight Report” by the Center for Health & Democracy and funded by Arnold Ventures. This represents approximately 10% of the U.S. physician workforce.
Independence-focused consolidation alternatives
There has also been an uptick in management services organizations and physician practice development companies who acknowledge the unavoidable financial challenges faced by many physician practices today, including soaring practice costs and years of reimbursement declines, but have met the moment with alternatives to consolidation that emphasize practice independence and physician autonomy.
Becker’s recently reported on Pelto Health Partners, a three-year-old organization that was born from a collaboration among three physician-owned orthopedic groups committed to supporting private practice sustainability.
“We felt something needed to be done to keep independent groups independent, as many were being driven into hospital employment or selling to private equity,” Frank Aluisio, MD, of EmergeOrtho, who now serves as chair of Pelto’s board, told Becker’s. “Maintaining independence is important in prioritizing patients and the physician-patient relationship — not profits.”
Pelto was envisioned as a platform to support small to midsized independent groups, particularly those struggling with nonclinical burdens like administrative tasks, vendor negotiations and infrastructure investments.
Pelto aimed to create a “landing spot for small to medium-sized groups that were struggling,” Dr. Aluisio continued, and to help out with back-office functions.
Becker’s has reported on at least seven other groups founded on similar principles in 2025.
