Key Takeaways
- • The share of physicians who own their own practice fell from 60% in 2012 to 44% in 2024 (all specialties combined), per the Industry Voices column, with 56% of physicians now working for hospitals, health systems or corporate entities.
- • The column attributes the decline to aging practice owners, a lack of entrepreneurship among younger physicians and rising burnout, alongside a Medicare Physician Fee Schedule that has fallen roughly 26% after inflation while practice costs have kept rising.
- • Private equity firms have acquired practices, ambulatory surgery centers and hospital systems to build scale and cut costs, but the authors argue independent growth remains viable.
- • The piece outlines four paths for independent physicians: maintaining the current model with tuck-in acquisitions, pursuing independent growth through debt or outside capital, physician-led consolidation, and investor-led growth with caution.
- • Authors Isabelle Bibet-Kalinyak (Pullman & Comley), Cynthia Matossian, M.D. (Matossian Eye Associates) and Rajesh U. Kothari (Cascade Partners) warn that investor return expectations can conflict with patient-centered care.
Summary
An Industry Voices column examines how physician-owned practices can grow without private equity backing. According to the piece, the percentage of physicians who own their own practice dropped from 60% to 44% between 2012 and 2024 across all specialties. The authors cite aging practice owners, weaker entrepreneurship among younger physicians and increased burnout as drivers, and point to economics: practice-related costs have risen over the past 20 years while the Medicare Physician Fee Schedule has declined about 26% when adjusted for inflation. Private equity firms have capitalized on this pressure by acquiring practices, ambulatory surgery centers and hospital systems, and 56% of physicians now work for hospitals, health systems or corporate entities.
The column presents several independent strategies. The first is maintaining the current model with adjustments, including "tuck-in" acquisitions of solo practitioners or smaller groups, which require less capital and leverage than large-scale deals. The second is independent growth funded by additional debt or outside capital, with options such as realigning share ownership, expanding ancillary services and office hours, introducing office-based surgery, improving staff compensation, joining a Group Purchasing Organization, and deploying AI-based call and refill platforms.
The third option is physician-led consolidation into a "supergroup," which can share infrastructure and reduce costs but depends on finding a partner of similar scale and culture. The authors list structures including Management Services Agreements, parent-subsidiary models, mergers and joint ventures, and recommend engaging legal, transactional and tax advisors early and agreeing on growth targets, capital access and exit strategy upfront.
The fourth option is investor-led growth. The authors describe healthcare as an attractive investment sector because of steady demand, resilience in downturns and multiple revenue streams, but caution that minority-stake investors typically expect high returns and that efficiency-focused investors may conflict with patient-centered priorities. The column concludes that consolidation will continue whether investor- or physician-led, and that independent physicians have multiple viable paths to success.
The column presents several independent strategies. The first is maintaining the current model with adjustments, including "tuck-in" acquisitions of solo practitioners or smaller groups, which require less capital and leverage than large-scale deals. The second is independent growth funded by additional debt or outside capital, with options such as realigning share ownership, expanding ancillary services and office hours, introducing office-based surgery, improving staff compensation, joining a Group Purchasing Organization, and deploying AI-based call and refill platforms.
The third option is physician-led consolidation into a "supergroup," which can share infrastructure and reduce costs but depends on finding a partner of similar scale and culture. The authors list structures including Management Services Agreements, parent-subsidiary models, mergers and joint ventures, and recommend engaging legal, transactional and tax advisors early and agreeing on growth targets, capital access and exit strategy upfront.
The fourth option is investor-led growth. The authors describe healthcare as an attractive investment sector because of steady demand, resilience in downturns and multiple revenue streams, but caution that minority-stake investors typically expect high returns and that efficiency-focused investors may conflict with patient-centered priorities. The column concludes that consolidation will continue whether investor- or physician-led, and that independent physicians have multiple viable paths to success.
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